How to teach your teen financial literacy at home
By Gaurav Kapoor, CEO & Co-founder of Mydoh
From an early age, I – and many others like me – have been focused on planning and saving for the future. Yet, we often miss those fundamental learning steps of building the skills needed to manage money confidently, from a young age. I was learning about allowances and money habits at a very young age, so when I entered adulthood, that saving instinct and responsible spending habit was already hard-wired in me.
In 2016, I built my first product in personal money management for adults; however, I noticed a foundational gap in financial literacy in teens and youth, due to the lack of education and practice at a younger age. This is what inspired me to create Mydoh, a money management app and Smart Cash Card that helps parents help their kids build good money habits now, that will last a lifetime.
Speak their Language
To make children and teens understand the meaning of money, we need to find ways to speak their language. For instance, you want to buy a video game for $60, and you earn $15 per hour at your part-time job. The result is that four working hours equate to the cost of the game. This gives teens and children perspective on the value of money and helps them decide whether their desired purchase is truly worth it. What does this do? This helps to create a feeling of independence, confidence and empowerment.
There are many ways to help your teen understand the importance of money, and that will build healthy spending and saving habits that can help them meet any short-term gratification and long-term goals. Here are three ways that you can teach your teen all about personal finance in a real and hands-on way:
Need vs Want
You hear kids and teens say, ‘I need it!’ many times. But the real question is: is it just that they want it? Need vs want is fundamental to learning about personal finance, especially for children. Needs are the essentials for daily living such as food or shelter. Wants are nice-to-haves, such as a box of cookies or a new PlayStation. Understanding this key difference helps in building a foundation for proper budget management, savings, and overall money sense. You can teach your teen or kids more about this with real-time learnings or using a youth money management, like Mydoh, to engage in an interactive learning experience.
Chores and tasks
A long-running Harvard study found that people who did more chores in childhood are happier later in life. Many parents like to take the ‘pitch-in ‘approach wherein kids contribute towards household chores. This is a great way to teach them the value of money. However, it is important to maintain the consistency of these chores along with the reward to get a wholesome sense of how they can earn their money. Simple chores like making your bed, tidying the bathroom, making lunch, or setting the table are all examples of chores that reinforce kids being an active and productive part of a family while instilling important core values. Using an app like Mydoh, which offers that reward incentive, further develops the child’s understanding and appreciation for the tasks they complete and the money they are earning.
Teens can often be found fumbling for cash when they need it. The first person they tend to go to is their parent. Setting up kids with a monthly allowance goes a long way in teaching them how to spend their money. Whether it’s $5 or $50, a weekly allowance is another great way to get kids thinking about budgeting and managing their money at an early age. Mydoh makes it very easy to set up an allowance and adjust and monitor whenever a parent needs to.
I use Mydoh to teach my daughter the basics of real money even though she is still young because I want her to feel familiar, empowered and trusted with the money when she is older.
Teaching kids about financial literacy at home is key to their overall readiness for being an adult, running a house smoothly, and further having pride in the tasks and rewards they receive. We need to instill more confidence and more financial resilience in the next generation. This is why I started Mydoh – to ensure that they felt confident and empowered to make money-smart decisions because they have that foundation required to build and sustain healthy financial habits that will lend themselves to their overall happiness and goals.