Talking to your children about their finances in their teens will stand them in good stead to make sensible financial decisions as they get older..
Understanding the concept of budgeting, the value of money and how and where they can save money on everything from travel to smartphones will give your children the tools they need to ensure they are not faced with as many financial pitfalls in the future.
However, many parents are put off helping with these lessons because they feel they are not financially savvy enough themselves – so here are our top tips for teaching your teens how to deal with money:
If you get your teenagers to shop with you, why not ask them to be in charge of the money for that day? It will help them get to grips with the cost of items, and learn to make choices about what would be good for themselves and the whole family.
They will also get a better understanding of how to buy ingredients for meals that will last more than one day.
It can also prepare them for when they leave home to go to university, because being frugal will become even more important.
2. Getting cheaper deals
Buying everything from a smartphone to car insurance is a part of growing up, and you should help your teens learn what to look for in a deal.
Smartphones are difficult to buy – and let’s be fair, your teenager might be more able to help you than the the other way around when it comes to buying the latest technology. But explaining that there are no such things as “free” minutes because you always pay for them somewhere will help.
There are also some great comparison sites to help with mobile phone purchases, such as , which is approved by Ofcom.
Car insurance for teens is often prohibitively expensive, and insurance premiums are rising fast. If a driver pays their “auto-renewal” price for motor insurance, they are paying £107.71 more on average than the best “shop around” price, according to data from comparethemarket.com.
Drivers under 25 are looking at around £1,000 for their car insurance, but shopping around means they can save an average of £236.
if your child has a part-time job, such as working in a shop, a restaurant or even a paper round, then getting them to put aside some of the money they earn to save for an item they want is a good way to learn the value of saving.
Individual savings accounts (Isas) offer a way of saving tax efficiently, and you may have opened a Junior Isa for your offspring already. If not, then consider this to help them learn about savings – they will be able to access the money themselves once they reach 18, but can run the account from age 16.
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That said, if your child does not earn more than £10,600 per year for this tax year, then they should not pay tax on savings anyway. So if there is a better paying account outside of an Isa, then by filling in form R85 from HM Revenue & Customs, their interest will be paid tax-free.
4. Cutting travel costs
This is a particularly important for students who may need to travel home from university.
Buying a 16-25 Railcard will give a young person up to a third off their rail fares, and the card itself costs just £30 a year, or £70 if you buy one for three years, giving a saving of £20. At the time of writing, a single fare bought on the same day as you were travelling, from Liverpool to London King’s Cross, would be reduced from £84.40 to £55.70 with this card.
5. Watch out for credit cards
Getting some form of credit card for university can be a help, but if debts start to mount up quickly then it can take a very long time to pay them back.
Just £1,000 on a card at 18pc interest with a minimum monthly payment of £40 would take two years and seven months to pay off, with £237 in interest, according to the Money Advice Service calculator.
So if your son or daughter needs to borrow money, then encourage them to look for 0pc purchase credit cards which will shield them from any interest payments for a period of time. For instance, Post Office Money Matched Mastercard is currently offering 0pc on purchases for 27 months , which would give your child some breathing space when it comes to repaying.