New Habits for a New School Year

I now have two kids in college, yikes! It’s definitely bittersweet to watch them fly, but I'm realizing at the same time that life may never be the same again! (Sniff, sniff) However, those years of intentionally preparing them for life are paying off, and I’m so glad I invested the time and energy into teaching them the life skills they need to live on their own. It’s true that one of the most critical tools you can give them is the ability to manage money wisely. Too often, young adults leave the comfort of home expecting to maintain the same standard of living they’ve grown accustomed to – and what does that lead to? Student loans being used for living expenses, credit card debt piling up, and financial stress that could have been avoided with a little preparation.

So, how can you help your high school and college-aged children develop good financial habits? It starts at home. Here’s how we handle it in our household:

1. Give Them Responsibility with a Budget

I’ve figured out how much I realistically spend on their necessities each month – things like toiletries, gas, school and church activities, and necessary clothing. Then, I hand it over to them. This becomes their “income” and it’s their responsibility to manage it. They use a budgeting app to track every penny, from the money I provide to any additional income they earn from a job, and even their savings.

2. Monitor and Guide, But Don’t Rescue

Each month, I check their budgets and keep an eye on their online banking to see how the money is being spent. But here’s the crucial part – when the money’s gone, it’s gone. I don’t bail them out. This might sound harsh, but it’s the only way they’ll learn the value of planning ahead and living within their means. If they overspend and run out of money, they’ll need to experience the discomfort of wanting or even needing something and having to wait until the next month because they didn’t plan well.

Of course, I’m not talking about abandoning them in a crisis – if there’s a genuine emergency, I’ll step in. But in the day-to-day, they need to feel the consequences of their financial choices.

3. Teach the Importance of Savings

Encourage your teens to set aside a portion of their money for savings. Whether it’s for something they want in the near future or an emergency fund ($500 in an Emergency Fund is recommended for teens), learning to prioritize savings is a habit that will serve them well throughout their lives. You can even consider matching their savings contributions to give them an added incentive.

4. Encourage Earning Opportunities

While managing a budget is crucial, so is understanding the value of hard work. Encourage your teens to get a part-time job or engage in side hustles that align with their schedules. Not only will this give them additional income to manage, but it will also help them appreciate the effort that goes into earning money.

5. Discuss Financial Goals

Have open conversations about financial goals, both short-term and long-term. Whether it’s saving for a car, setting aside money for college expenses, or even thinking about retirement, these discussions can help them understand the importance of setting financial goals and working toward them.

6. Model Good Financial Behavior

Lastly, remember that your teens are watching you. Model good financial habits in your own life. Show them how you budget, save, and make decisions about spending. The more they see you handling money wisely, the more likely they are to follow in your footsteps.

These real-life financial lessons are invaluable, and there’s no better time to teach them than while your children are still under your roof. Let them struggle a bit, make mistakes, and learn – before they’re out on their own. It’s one of the best ways you can prepare them for the financial challenges of adulthood.

By taking these steps, you’re not just teaching your teens to manage money; you’re setting them up for a lifetime of financial success. Let’s prepare them well!