Use these practical tips to help talk to teens about money.
Asking for help when you're in money trouble
- You can help your teen stay out of money trouble by explaining to them how you avoid debt getting on top of you. That might mean showing how you read the fine print on a purchase or how you put off buying something until you had enough money to pay for it.
- Tell them about a time you were scammed or got yourself in money trouble, and what you did to get out of it. Let your teen know that adults get in trouble too and not to be embarrassed.
- If your teen comes to you for help because they’re in money trouble, try not to be too judgemental. It will have taken them a lot of courage to talk to you and they’re trusting you to help. Listen without judgement to what the problem is, and work with them to find a solution. Remember, we all make mistakes and you want them to come to you when things go wrong.
Dealing with debt and bad decisions
- Teens these days will do most of their purchasing and subscriptions online and when you’re not physically signing on the bottom line, it’s easy to gloss over the fine print. Help them form good habits by reminding them to read the terms and conditions and helping them understand any complex terms.
- Remind your teen that if something is ‘free’ on the surface, it’s very likely there are hidden costs.
- Next time you sign up for something (a phone plan or a credit card), show them the terms and conditions and explain terms like cooling-off periods and exit fees. The Australian Consumer Competition & Consumer Commission website explains what your rights are when it comes to contracts.
- Tell them a story (everyone has one!) where something ended up costing more money than you expected, and what you did to fix the situation.
Getting a bank account and card
- Talk to your teen about your bank and what you do and don’t like about it. Remember that just because the bank meets your needs, it may not meet theirs. Help them review different accounts on comparison websites.
- Next time you pay a bill or move money between accounts, slow down the process and show your teen how you do it. Show them how the balance changes in each account.
- While it’s often easy to do online, if you’re helping your teen open a bank account, consider going to a physical bank branch instead. This way your teen can ask the staff questions about the terms of the account, and it will give them a better understanding of the reality of the banking system.
- Don’t assume any of the words you use and understand are familiar to your teen. Let them know they should ask if they don’t know a word, and you can check ‘What does that word mean?’ for simple ways to explain complex terms.
- Before your teen starts investing, help them to come up with a clear plan for their investment. Some questions you can ask them are: What do they want to achieve? How much of their money are they willing to lose (risk appetite)? How long do they expect it will take them to make a profit?
- If your teen has any debts or owes any money, encourage them to pay this off before investing. Ask if they have enough savings outside their investments to cover any future expenses. This way, they won’t have to sell an investment quickly if they are desperate for cash.
- Talk to them about the importance of diversifying their investments – spreading their money across and within asset classes, like cash and shares, to help lower the risk they will lose all their money.
Other ways to pay
- If you use a credit card or buy now pay later service, talk to your teen about when and why you use it and how you make sure you make payments on time.
- Share with your teen a time when you forgot to make a payment or only paid the minimum amount, and how much extra that cost you.
- Remind your teen that even if you’re not paying for something upfront, it isn’t free. You may be paying for something for weeks or months after you’ve received your purchase.
Saving and spending money
- Next time you decide not to buy something straight away, explain why to your teen. Is it because you realised it wasn’t something you needed right away? Or something you couldn’t afford this pay, but could next week? Or did you know you could get a better deal somewhere else or if you waited for a sale?
- Bring your teen into the conversation when you’re making shopping or spending decisions. Talk them through how you compare products for value, or how you know when something seems too good to be true. Talk to them about how advertising is designed to influence you and you should always look closely at the terms and conditions. Show them how they can make their money go further, with savvy spending decisions.
- If you’re saving for a big household purchase, such as a family holiday, talk to your teen about how you plan to save over time and the trade-offs you have to make. Maybe even work out a savings plan together. Will you put aside money each week from your pay? Or will you cut back on some purchases, such as eating out, so you can afford that family holiday? Getting your teen involved in household finances is a great way for them to learn about saving and spending money.
Working and getting paid
- Help your teen look for jobs. Help them work out whether a job is legitimate and paying the right amount of money. Check their job application for any mistakes. Remember that times have changed since you were a teenager, and most of the time you can’t simply hand in a resume or speak to a manager in a store. Most businesses will only accept applications online.
- This may be the first time your teen has filled in official forms or used online government systems. They may need your help to understand what to fill in where, and to gather up their ID.
- You might want to look at the ATO’s resources to help adults teach teens about working and getting paid, with practical, real-world examples.