While I was growing up it was made very clear to me that when I graduated from high school I was going to have to come up with some money to either go away to college or get my own first apartment. (I don’t know why. I was a lovely child as a teenager.) Either way I was going to have to figure out how to manage my own money, and let me tell you that like many others before me I was ill prepared.
It was very overwhelming. I had to figure out how to set up my own bills (what’s a deposit?), I had to figure out how to pay them on time (you mean I need a checking account?), and the whole while credit card companies kept offering me free cash. (I mean what’s a girl to do? Free cash?! Yes please.) Needless to say I got myself into a little bit of trouble, and thankfully for me it wasn’t too much trouble before my parents gave me the business and helped me fix my mess.
Many, many others, however, don’t have the means to help their loved ones out of the financial messes that they create for themselves when they are out on their own for the first time. So rather than throwing your kids into the pool without a proper pair of water wings, why don’t you teach them how to manage their money now while they’re still living with you?
Here’s the plan.
Have them take responsibility for some of their own bills with their own money.
I know. It seems overly simplistic, but it works. Here’s how.
1. Start Small: Don’t suddenly announce to your child, “OK. Today you’re taking over the bills. Don’t screw up.”That would be silly. Instead think about a bill that you’re paying that is directly related to your child. My son, for example, has a cell phone that is only his. I make paying that bill his responsibility, and because not paying that bill has a direct affect upon whether or not he has a phone to use, he has been quite successful at paying that bill.
2. Provide Choices: My son when we purchased his phone for this birthday knew that he would be responsible for paying his own phone bill from his allowance. So when we were looking at the various payment plans I helped him pick a plan that fit into his budget and that would give him what he wanted. Ultimately the final choice was his, and taking ownership of that choice has eliminated the “it’s not fair I didn’t pick this”argument. Also this power that you give them to make their own choices about where they spend their money can create a sense of pride when they succeed by making smart decisions.
3. Have Them Pay You With Their Own Money: Now if you’re a little bit like my husband and I, you don’t want your kids messing with your credit that you’ve carefully built over the years. And although the idea is great about them paying their own bills, ultimately if they don’t, in many cases parents then become responsible for the payment of the bill. So, have them pay you out of their allowance or their pay check, etc. That way even if they don’t pay on time or at all you can avoid dinging your credit. This doesn’t mean that they won’t have consequences if they don’t pay when they should.
Give them the same consequences that a bill company would enforce. Make them pay heavy fees, nag them the way a credit agency would, and if you like foreclose or repossess. I know it seems kind of silly, but this kind of love is providing them great lessons before the consequences become really harsh and overly real life.
4. Be Ready For Them To Make Mistakes: It’s the rare human in the world who starts something and completes it without stumbling on the way. And really isn’t one of the main reasons you are teaching them now is that you know they will screw up the first time they try to manage their own money? Be patient, be ready for a few tears, and know that at least now their mistakes don’t cause any real financial damage to their future. And in their future when Mom and Dad says, “Time to move out Johnny,”they’ll be prepared.
Though I don’t know why you’ll ever want them to move out. They’re such a joy when they’re teenagers. I know I was.
What are you actively doing to prepare your kids to manage their own money?