11 February 2015

Preparing Our Teens to Manage Money in the Big Wide World

My oldest grandson has just come to live with me.  My friend Yvonne Godfrey, whose new book ‘Parenting Yadults – How to Set Up Your Young Adult For Independence and Success in Life’  has just been released, has inspired me to share some of the experiences.

‘Rob’ she said the other day, ‘people are hungry for this information.  There’s hardly anything written about grandparenting. You’ve got to share it.’

So here’s the first instalment – about teaching a teen how to manage money. one paper with an empty todo list with green check marks and a green pen

One Man’s Opinion

‘You’re doing what to your grandson! That’s a bit tough,’ said one of my sailing mates a couple of weeks ago, notes of both disbelief and disapproval in his voice.

Here’s what I’d just explained to him. What do you think?

My 18 year old grandson, whilst sitting at my dinner table about four weeks ago, suddenly said, ‘I’d like to come and live with you, Robbie.’  His parents are on an overseas posting for three years so he’d been boarding with his other grandparents for the latter part of last year. They’ve been very good to him but I sensed that all parties were happy to consider a change.

I replied, ‘Sure you can, and here’s the deal. I’ll be a grandmother when I need to, but let’s think of it as a flatting arrangement as much as possible.’ My rationale – because his money management skills are very haphazard I suspected he would struggle financially once he left school and went into a normal flatting situation. Also his domestic competency left a lot to be desired. (Yes, I know you’re thinking ‘show me a tidy teenager!’ Unfortunately, in my work I see a lot of adults who haven’t improved since those days, which leads me to suppose that either their parents didn’t enforce good standards, didn’t teach them, or maybe tidied up after them.)

So, faced with a lovely teenager who’d just paid me the compliment of asking to come and live with me, I figured the best way I could play my part in helping to equip him for his rapidly looming future was to help him learn to live independently whilst still in a safe and supportive environment. Today I want to talk about the money management part of the equation. He could be with me for a year so no doubt I’ll have other things to share over time.

We’d been on holiday together over the previous six weeks, three of them spent travelling back and forth to the East Coast of the US with his 16 year old brother and a friend. (I’m not sure if my teenage companions took me or I took them!) I’d watched pocket money slip through his fingers, wasted on seductive non-essentials and rubbish such as chips and coke.  Whilst he was someone else’s responsibility it wasn’t appropriate for me to interfere, but here was Sam giving me the chance to really help.

Another thing I’d noticed was that there seemed to be no savings habit. I’d been party to a number of hopeful conversations which started along the lines of: ‘I really need a computer, or better lenses for my camera, or …. ’. Then would follow a pregnant and hopeful pause – would the Christmas Fairy (alias the listener) stump up with the goods? Saving for big items didn’t appear to be on the radar.

How do we all learn? By experience.  Being dished out pocket money didn’t seem to be teaching him anything.

So, over the dinner table we nutted out the following arrangement. He would receive the full dependent child boarding allowance paid to his parents ($245 per week), pay me a small rent of $70 (below market rates), $30 for ancillaries (power, water and internet), buy and cook his own food, and whatever was left over was his for savings, incidentals and anything else.

In the last two weeks there have already been some ‘learning’ opportunities and no doubt there are more to come, but the experience is proving to be very educational to both of us! For instance, the first week he had to pay board he thought it was paid at the end of the week. (I thought I’d made it clear that commitments get handled first, but clearly I hadn’t.) We all know what happens if we expect to pay bills with what’s left at the end of a pay period!  He was away for a few days when the money came in, and by the time we were settling in at home and I asked for my board, sure enough, he’d spent almost all the money. Solid work in the garden paid that week’s board and he had to feed himself for a week on $36! It was quite fun walking round the supermarket with him, watching him plan how to spin the money out. Bread and mince go a long way!

He has now set up an automatic payment to pay his commitments first. Even that has been a little challenge – he accidently paid me too much this week and had nothing left in his bank account to buy an art book for school. (I did pay it back!)

The next step is to set up sub-accounts so his food and a small % for savings go into different accounts as soon as he receives his money. Anything left over is his to use as he wishes. We’re also looking for part-time jobs so he can save for those bigger items.

Back to the shocked fellow sailor. ‘You’re not making him pay board!’ he said in disbelief. ‘Surely you’re pulling my leg! Isn’t the role of grandparents to be soft and kind, and to spoil their grandchildren?’

‘No way,’ I replied. ‘How can a young man, right on the edge of adulthood, learn if he’s treated like a little kid, with pocket money coming of right, no incentive for saving and someone else (in this case me) making all the fiscal decisions?  I see the job of both parents and grandparents is to provide our kids with a safe and protected environment to learn responsibility. I won’t let him starve, I don’t growl (or not often!), and I’m guiding and teaching him. I know he’ll make mistakes – that’s how we all learn. He has to be able to manage on his own by the time he leaves school at the end of this year.’

My philosophy: We have to be tough to be kind. If we over-protect our young ones we damage them.

What do you think? How have you helped your teenagers step into adulthood?

10 thoughts on “Preparing Our Teens to Manage Money in the Big Wide World”

  1. Anthony says:

    Well done. Trying to do the same with my children now – they’re all about the now and no thought for the later. Not saying I was perfect at that age though!

  2. Catherine says:

    Yes we do need to be tough to be kind. Robyn, you’re a blessing not a curse. I believe that teaching our children and/or grandchildren to manage their money is one of the best things we can do for them. My four have all paid board from the time they left school and now own their own homes (or in the process). They value what they earn and how they spend it. Great article!

  3. Kim says:

    Totally agree with you, well done! So many teens will fail to launch if we don’t help them like this. PS The part I don’t believe is that you an 18 year old grandson Robyn..come on… :-) ?!

  4. Thank you Robyn. What a realistic way of looking at maturation. Wish I’d done it with my sons. I will keep it in mind as I’m socializing with my younger (4 & 7 years old) granddchildren.

  5. Lisa Rose says:

    Great to hear Robyn! We’ve started well I hope. When our kids were small (5?) we set up a bank account for them and put a small amount of monthly pocket money in. Anything they wanted to buy with this discretionary money involved discussion and an actual trip to the bank. At 15, we’ve moved the oldest three on to a monthly allowance, out of which they are expected to clothe themselves, pay for their cellphones, social activities, birthday presents for friends and any technology upgrades. They then get any paid work money put into that account as well – needless to say we encourage finding a job. We pay for education related expenses, sports fees and equipments and cover room and board for them. In return, they’re expected to cook one night a week, look after the younger siblings, do a variety of household chores. Thus far, the three who are on the allowance always have month left over at the end of the money, but it is teaching them better habit I have to say, and they have less expectation of just being bought things. One has become a great op shopper for clothes, and the others are saving for overseas trips, computer equipment and so on. So far, so good!

  6. Sandra says:

    In our role as parents and grandparents it goes with the job description – we are preparing our cherubs to look after themselves and our future grandchildren by the time they leave school! It’s not often a popular process but we just have to ask ourselves, who is the grownup in this equation?!
    Thanks, Robyn!! He’s a very lucky young man.

  7. Dale says:

    Great idea indeed. When I first started working I paid mum and dad weekly board. Was a smallish amount. But they saved it and when I left home it was given back to me in things that I needed for flatting. I didn’t know they were doing that but think it’s a great idea, as I still got to learn how to budget etc. If I ever needed to borrow a substantial amount of money I was fortunate I could go to my parents but always paid back 10% interest.

  8. Steuart Snooks says:

    Love your work Robyn!

  9. Deb Mills says:

    Totally Agree Robyn. Well done. The future wife of said child will thank you!
    (You know my philosophy on dish washing!)

  10. Julie says:

    Great work, Robyn. Regarding your friend’s comment, I guess if the child/teen is well on their way to independence, shows they have the necessary life skills and demonstrates the ability to make good financial decisions then you could probably sit back and spoil them. But that doesn’t seem to be the case with your grandson and I think it would be irresponsible to see that and do nothing. How is he going to learn to manage money if not give the opportunity to actually do so? My son is 7 and has received a small amount of pocket money weekly since he was 5. One third is for long term savings (banked yearly), 1/3 for ‘giving’ which he can spend on anyone else (buy birthday or Christmas presents, take his Gran out for hot chocolate etc.) or donate to a charity of his choice, and the final third ($1) to spend on whatever he likes. This spending money is never spent on lollies but saved for several weeks or even months to buy something, usually a small Lego set. I have taught him to look out for sales and explained how much he can save if, for example, a $10 Lego set is discounted by 20% but he may have to wait a few weeks. I also think that providing information about nutrition and healthy eating means he does not want to waste his money on stuff that will disappear in a flash yet is not good for him. Now I am working on getting him to learn to cook…

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