1. Set spending limits
There may be a sudden burst of spending for the teen, but you will need to set boundaries for the child. If you were giving the child a monthly allowance, you could increase the amount in line with his increased spending. This amount may vary from early to late teen years and the amount needs to be realistic in line with the spending needs, but make sure that the preset limit is not breached. So if the child spends all his allowance by mid-month, do not give him more money till the next month. Even if the child wants to earn extra money through parttime jobs or online ventures, ensure that the spending limit is firmly observed.
2. Cards: credit & debit cards, prepaid cards or wallets?
If you are not paying a monthly allowance to the teen and hand out money as and when required, it may seem an easier option to give him a card that can be used as per his needs. Which is the right type of card for him to use responsibly? A credit card is a complete no-no for a teen as a first spending tool, and should only be used when he gets a job and starts earning. This is because the high spending limit and hassle-free usage can make it difficult for a teen to imbibe the discipline needed to use a credit card and turn him into a reckless spender. On the other hand, a debit card, prepaid card or a wallet with a preset amount or limit, can be a good option. This can be especially useful if your teen has moved to another city for studying. It not only gives the independence to spend at will, but also induces discipline of spending a fixed amount every month.
3. Internet & mobile monetary transactions
Even though the teen may not exercise the option of Internet and mobile banking and monetary transactions, it is important that he learn these by the time he is in his late teens. This will not only make him technologically savvy, but if he moves out for studies, he will be able to conduct his transactions independently. You will, of course, need to monitor all transactions and impose spending limits, but it will be a good learning experience for the child when he secures a job as an adult.
4. Financial knowledge
If you want your teenager to be financially responsible and independent at the same time, it is important to lead by example and introduce him to household transactions. Explain how you run the monthly household budget, ask him to save for a gadget or bike that he wants to buy in a specified time frame, allow him to order food and pay online, or make travel bookings. The more he knows about managing money, the better financial decisions he will take.
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Disclaimer
The advice in this column is not from a licensed healthcare professional and should not be construed as psychological counselling, therapy or medical advice. ET Wealth and the writer will not be responsible for the outcome of the suggestions made in the column.
