Paycheck Chronicles

From USAA: Teenagers and Holiday Spending

The nice people at USAA sent me over an article on teenagers and holiday spending.  The holiday season presents an excellent opportunity to talk with your teenager about money.  Here's the article:

Turn HolidaySpending Into A Merry Money Lesson

>Courtesy of USAA

Many families will use the power ofplastic to make cash registers ring this holiday season. But that might bringbad tidings after the first of the year, according to a recent survey by USAAthat asked teens how they learn about money. And unfortunately, racking upholiday debt may be another way parents are teaching bad money managementskills to teens.

According to the survey results,nearly three out of four of high-school teens say they learn "a lot" or "adecent amount" about money management from their parents. But it doesn't comefrom lectures - it's from watching how their parents spend.

"Parents are raising a generation ofbig and possibly irresponsible spenders," explained USAA CERTIFIED FINANCIALPLANNERTM practitioner J.J. Montanaro. "Nearly half of the parentssurveyed confessed that their money management habits range from 'OK' to 'horrible'."

There's still hope for the upcoming holidayseason, though. Montanaro offers these four suggestions for how parents canturn holiday shopping moments into lifelong money lessons:

Put Holiday Budgets on a Diet

Just as splurging on extra holidaydessert can add up around your waistline, the same applies to holidayoverspending, which can fatten up your debt. With more than 40 percent ofparents in the survey admitting they don't have a household budget, many teensaren't subject to the financial discipline they need. Turn this statisticaround and sit down with the whole family to develop a spending budget for eachfamily member for the holidays. This will help teens develop the financialdiscipline they'll need in the future, while still allowing them theopportunity to do some holiday shopping.

Making the Most of the Christmas Credit Crunch

For many revelers, the holidays mayseem like a bottomless bowl of treats with no long-lasting consequences. Thesame goes for teens who don't realize that abuse of an ATM or credit card cancause just as much long-term damage to their financial health. Start byencouraging teens to avoid the "invisible money" of the ATM until they have theskills to manage it effectively. Have them set out what they want to spend sothey can see a direct connection between their budget and their spending. Alsodon't be afraid to get out the credit card bill and outline how payments,interest, and expenses add up to the number on the bottom line, and show yourteen how interest can build up when credit cards are used irresponsibly and thebalance isn't paid in full.

Give the Gift of the Hard-Earned Dollar

Getting teens to understand thevalue of all the hard work that parents put in so they can buy Christmaspresents can be difficult. "Many teens may be missing out on the real value ofthe dollars they're spending, because they aren't making a connection with theeffort that was put in to make that money," says Montanaro. With almost half of teens not working fortheir "fun money," according to the USAA survey results, a holiday season jobcould be just the ticket to learning the value of a dollar. Encourage your teento get their own job so they can see their hard work turn into the cold cashthey'll spend on their friends and families during the holidays. 

Stuff Stockings with Savings?

Also, remember that there's nobetter way to teach teens to be accountable for their spending than byempowering them to manage their money. Set up an online savings account anddebit card for them, and show them how to manage and monitor their spending onthe web. When teens can see how their debit card takes money from their savingsaccount, they'll better understand how that piece of plastic isn't an endlesssupply of spending power.

Using the holidays to teach teens goodmoney management habits may make you feel more like Scrooge than Santa Claus, butlearning to be financially savvy is a priceless gift. Visit usaa.comfor more information about teaching your children ways to develop good moneymanagement skills.

USAA means United Services Automobile Association and itsaffiliates.

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