It is that time of the year when every month comes a new festival – Diwali, Christmas and finally the New Year. With the holiday shopping season approaching, many of us will break out the holiday music and sip on our favorite drink while making our list, then double-check it and look at this year’s holiday budget. While this is quite a tedious task for adults, it certainly becomes a lot more complicated when teenagers take it up, considering that they depend on their pocket money to meet personal expenses.
We all have at some point in our lives wanted to know about the importance of saving money from a young age, right? Fortunately for our current adolescent population, financial literacy and understanding has become an integral part of their overall development, making it the need of the hour. This feature becomes far more relevant during the holiday season.
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Parents can help children develop these habits from an early age to help them achieve greater financial literacy and become financially responsible. Here are some handy tips to help teens manage their pocket money during the festive season.
Help them understand the difference between needs and wants
To help children understand the value of money, parents should discuss the difference between needs and wants as a first step. They should be made aware that basic things like food, clothing, shelter, health care and education come in the list of needs as compared to purchase of material like smartphones, cycles, gadgets or even movie tickets etc. , which fall in the list of needs.
encourage them to make their own money
It is a known fact that we realize the real value of money only when it has been earned. Before the festive shopping started, parents could look for fun yet work based activities for their kids to earn some money. They could start by rewarding them for doing chores around the house. Such a simple approach can also motivate teenagers to explore internship opportunities while pursuing higher education. By earning their money, teens gradually begin to understand the value of hard work, while learning how to earn, spend, and save money wisely.
tackle expenses
The concept of saving money is definitely a bit daunting for today’s generation that thrives on living a digital lifestyle. Think about it, we felt the same way during different stages of adulthood. To help them achieve their festive shopping goals, parents can start by asking them to set a goal to keep them motivated to save money.
For example, if they want to buy a video game for INR 2,000, parents can help them break down their goal of how much they need to save each week or month to be able to buy the game. This will not only enable them to keep track of their spending but will also help them reach their goals faster.
The parent must act as their child’s creditor
Teenagers often become impatient while saving and want to reach their goals quickly. However, it is an ideal opportunity for the parents to help them understand the concept of borrowing and lending better by acting as their creditor- by lending them money for their goals. The children in turn learn essential savings skills, while they return some part of the amount borrowed from their monthly allowance in the form of equated monthly installments.
Offer incentives/interest on their savings
Adolescents should be encouraged to save more by giving incentives. One way to do this is to match them with a certain percentage of their savings which allows them to understand the concept of incentives and interest. This skill is much needed, especially as they enter adulthood and kickstart their working careers.
A place to save and store your money
Adolescents need to be made aware that savings are not limited to depositing cash. Keeping the material demands in mind, parents should set up a savings account for them which can be easily accessed. Additionally, the youth centric Neobank and Pocket Money apps, which offer a digital savings account, digital wallet and contactless card, can both be opened and accessed from the convenience of home. This generation is digitally savvy and most receptive to an easy-to-use, intuitive, gamified and education-driven banking experience.
Money management can play a balancing role between pre-festival and post-festival expenditure requirements. However, it is important for parents to instill financial literacy in adolescents as an essential life skill and not as a shortcut approach restricting them to the festive season only.
– Written by Mukunda Rao, Co-Founder, Muvin
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