5 Things Teens Should Be Taught About Money

gelato_cat

People aged 16+ can save money in an ISA - OK rates, and tax-free!

Some building societies also offer great rates on kids' savings accounts, eg the Halifax has an account for under-16s which pays about 4.8% I think, plus they have accounts that can be opened on behalf of the kid which pay 10%.

Suze

alexj2002 wrote:

Teenagers are incredibly poorly served by banks.

The only main a/c's available are rubbishy cashcard accounts. The top savigns a/c's usually aren't available till 18-21 yrs.

The only exception is Egg which is 16.

Still where do they go for 3 years except rubbish lowintrest cashcard accounts?

Boyd_2

Teaching children the importance of managing money starts really early. When taking children (aged 4+) out for a treat/day out, give them a small amount of change in a purse (so they don't lose it) then say BEFORE you leave the house. Here is some spending money - you choose how you spend it - but when it's all gone there isn't any more. If you have any left at the end of the day - you can keep what's left and put it in your piggy bank. Increase the amount of money as they get older. You will be surprised how children can learn to choose between one single expenditure, several small ones, or saving for something bigger and better.

You do have to keep to the "there isn't any more" rule. This also means they don't spend the whole day asking you to buy them things.

Have a selection of household jobs which need to be done every day/week and a selection of payments attached according to the job. Pocket money to be paid out at the end of each week depending on number of jobs completed. Keep a chart/tally sheet stuck to the fridge - but don't take money earned away as punishment - use something else.

As they get older give them an allowance but make it clear exactly what you expect them to fund out of it. For example, presents for friends, mobile phone bill, casual clothes, trainers etc. These items can be negotiated at the beginning. Be realistic with the amount given as an allowance and the items you expect them to pay for. Keep to the rules and they will learn quickly that you must budget in order to live within your means.

Encourage them to get a weekend job to earn their own money.

Once they become teenagers hopefully they will have a good grasp of money and what it means and will be busy saving every penny they can get hold of to pay for driving lessons and their own car.

Be fair and firm and help them by teaching them skills to manage money.
It may seem unkind in the short term but long term these are lessons for life.

schoolfundraiser

alexj2002 wrote:

Teenagers are incredibly poorly served by banks.

The only main a/c's available are rubbishy cashcard accounts. The top savigns a/c's usually aren't available till 18-21 yrs.

The only exception is Egg which is 16.

Still where do they go for 3 years except rubbish lowintrest cashcard accounts?

I recently set up a NatWest current account for my daughter (14) so that she has a debit card she can use for her clothes. The idea is that I give her a clothing allowance each month and she buys her own clothes. I wasn't happy about a cashcard because it means she has to draw out and carry cash about when she is shopping. Obviously I will go with her for the first few times until she gets used to it.

Anyway the NatWest people were very helpful - it took about 10 minutes to open on a Saturday - they need proof of ID for both you and the child obviously and they didn't need money to open it - that comes later. The interest is only about 3% but the point is that I can set up a standing order into it and as it is a bank the normal clearing rates apply. It has the SOLO logo and acts as a normal debit card. There isn't a cheque book with it but statements and hole in the wall balances are available. The lady who opened it took time to tell my daughter about the effect of time delay in processing and encouraged her to keep records in a special little book they give you - rather like cheque counterfoils etc. And when I went to pay in the first money the cashier said to tell my daughter that if she pays in cheques and cash together it takes the same time to clear as if it were just cheques. If she has a mixture of cash and cheques it is better to pay in the cash separately so that it is available to take out sooner.

We are just waiting for the PIN no to come and then we are off to try it out in Primark at half term.

:rotfl:

schoolfundraiser

Only one thing really to add to the other suggestions previously posted

The cost of actually getting hold of a bargain should be added to the price when deciding whether it is a bargain.

A warning to ebay buyers in particular. If it costs £60 in petrol, considerable wear and tear to an already dodgy old car and two people 8 hours each sitting in a car to go and collect something it would have to be really really cheap and come with a full warranty to tempt me!!!!:rolleyes:

someone

Dont be tricked by banks changeing interest rates.

An acount that use to pay 5% but now pays 4.5% pays 10% less interest on the same amount of money.

Same is true on Credit Cards 10% to 15% results in you paying 50% more interest!!!

When you look at these changes first they dont seem to be as drastick as what they realy are.

schoolfundraiser

Over 16s can take out ISAs once they get a NI No and are liable to tax on earnings etc. Under 16 provided the money they put in it is not from parents their non-taxpayer status makes quite a reasonable interest rate of 5% attractive and some of the regular monthly savings accounts where a set amount is guaranteed each month and it isn't touched can offer up to 7% gross
Providing they don't earn enough from part-time jobs etc (below £94 per week according to the latest R85 form helpsheet) they can get the benefit of both an ISA and gross interest rates on a regular savers account.

So say if they get a weekend job in one of the supermarkets and earn £25 a week and put £80 away in a monthly saver each month they get the high gross interest rates within the account's monthly limits (usually £100 a month) Any extra from such as summer holiday jobs or extra hours can either be used to top up the monthly amount to the limit or put into an ISA. The regular saver account would be just under £1000 per year. In two years that could be a car!!! Not a good one but a car nevertheless.

This assumes of course that the parents cooperate and still give them a bit of pocket money to top up the minute proportion of their wages that is actually theirs to spend.

lizsil

On the student loan and debt thing, did anyone see that the poor girl who went missing in Oz and turned up a couple of weeks later, was actually trying to escape her debts of £25,000. She'd taken out the max on a government student loan and then another £16,000 on a Barclays studies loan.

I think it's criminal that young people start out owing so much by simply trying to get an education. And then they want what we all do: a good job, a car, a wedding, a home and a happy retirement (well, we're told to start saving for that in our 20s) - where's all the money supposed to come from?

It should be part of the National Curriculum that children learn about money in a real-life way - not just a few sums in maths lessons and people like that poor girl in Oz should be given a platform to share their experiences - it might make others think twice.

I just hope the Mail - who interviewed her - paid her enough to pay back her debts...

Jecca_2

I am a teacher and my 15 year olds study a module "You and your money". We do work on tax and NI, budgets, salary ranges for different jobs.
Then we compare rent and mortgages and find out that they are roughly the same but if you rent you don't end up profiting from house price increases!
So - the problem is the deposit! We then work out how much they can each save from aged 15 to 25 (with compounded interest) to enable them to save between £15,000 and £20,000 which might be a part share in a deposit for a house of their own. They are always shocked but I think it hits home for some if not all!

ally_3

I'd agree with reaper - that kids should be taught to save up for something they want. The problem with this though, is that by the time the kids have saved up, the shop (or whatever) have sold out of the one they wanted, and re-stocked with a newer, more expensive version. This has happened to my son so many times, despite the fact that he gets weekly pocket money (which he has to do jobs to earn), and he has 'optional extra' jobs to earn him extra cash - nothing major! Vaccuuming, keeping his bedroom tidy, getting his spellings right at school, etc., and helping his dad wash the cars is one of his optional extras. Anybody else feel like this, and do they have any ideas for ways round it? We do encourage him to save, but until there's actually something he wants, he's not that interested (particularly in the extra jobs), and then we're back in the position of the item being sold out by the time he has saved

susiesaver

Something I told my 2 daughters:

Every time you go to buy something, work out how many hours you had to work to earn the money to pay for it then decide if its still worth buying.