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Teaching our teenage children about money
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Teaching our teenage children about money

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Teaching teenagers how to manage their money is giving them an essential life skill that will serve them well into adulthood. With the rising cost of living and the increasing complexity of financial products, it’s more important than ever to equip young people with the knowledge and habits that can lead to financial independence. Here are tips to help our teens manage their money wisely, including the principle of tithing.

1. Create and stick to a budget

One of the most important skills for financial management is creating and sticking to a budget. Encourage your teenager to start by tracking their income and expenses. This could include allowances, part-time job earnings and any other sources of money they might have. On the expenses side, they should note down everything they spend money on, from daily snacks and transportation to bigger purchases like gadgets or clothes.

To make this process engaging, suggest using budgeting apps like Money Lover or Wally, which are available in the Philippines. These apps can help them visualize where their money is going and identify areas where they can save. Emphasize the importance of differentiating between needs and wants, and teach them to prioritize essential expenses over discretionary spending.

2. Understand the value of saving

Saving money is a habit that should be developed early. Teach your teenagers about the importance of setting aside a portion of their income for future needs. One effective method is the 50/30/20 rule: allocate 50 percent of their income for needs, 30 percent for wants and 20 percent for savings. Explain the benefits of saving regularly, such as building an emergency fund, preparing for future educational expenses, or saving for a significant purchase.

Encourage them to open a savings account at a local bank. Many banks in the Philippines offer savings accounts specifically designed for young people, often with lower minimum balance requirements. Explain how interest works and how it can help their savings grow over time. Additionally, introduce them to the concept of compound interest and how starting to save early can significantly benefit them in the long run.

3. Teach the basics of investing

Once your teenager understands the importance of saving, introduce them to the basics of investing. Investing can be an excellent way to grow their money over time, and it’s never too early to start learning about it. Explain different investment options available in the Philippines, such as stocks, bonds, mutual funds and UITFs (unit investment trust funds).

Consider setting up a small investment account with them, where they can manage a portion of their savings. This hands-on experience can be invaluable. Use online platforms like GCash’s G Stocks and G Funds, which offer user-friendly interfaces for beginners. Discuss the risks and potential returns associated with different types of investments, and emphasize the importance of diversification to spread risk.

4. Incorporate tithing into their financial plan

Incorporating tithing into their financial plan can teach teenagers about generosity and the importance of giving back. Tithing, or giving a portion of one’s income to the church or charitable organizations, is a practice rooted in many Filipino families’ faith and values. Explain to your teenagers the concept of tithing and how it can be a meaningful part of their financial management.

Encourage them to set aside a specific percentage of their income for tithing. This could be 10 percent, following the traditional tithing amount, or any other percentage they feel comfortable with. Discuss how tithing can help those in need and support God’s kingdom, and how it reflects their values and beliefs. This practice not only instills a sense of responsibility but also fosters a habit of generosity that can last a lifetime.

5. Encourage responsible use of credit

Credit can be a powerful financial tool, but it needs to be used responsibly. Explain to your teenager how credit works, including the concepts of credit scores, interest rates and the dangers of accumulating debt. Discuss the differences between debit cards, credit cards and loans, and the importance of paying off any borrowed money on time.

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If appropriate, consider giving them a supplementary credit card with a very low limit, and monitor their spending together. This can be a practical way to teach them about managing credit and the importance of paying their bill in full each month to avoid interest charges. Emphasize that credit should be used for emergencies or significant, planned purchases rather than everyday spending.

6. Instill a mindset of financial responsibility

Finally, instilling a mindset of financial responsibility is key. Teach your teenagers the value of money and the effort it takes to earn it. Encourage them to set financial goals, both short-term and long-term, and to work toward achieving them. This could include saving for a new gadget, contributing to their college fund, or even starting a small business.

Discuss the impact of their financial decisions on their future and the importance of living within their means. Use real-life examples to illustrate these points, such as how overspending can lead to financial stress or how prudent saving can provide financial security.

Incorporate discussions about financial news and trends in the Philippines to make the lessons more relevant. Encourage them to stay informed about economic events and how these can affect their finances. By developing a well-rounded understanding of money management, Filipino teenagers can grow into financially-savvy adults capable of making sound financial decisions.

Teaching our teenagers about managing money is a valuable investment for their future. By helping them create and stick to a budget, understand the value of saving, learn the basics of investing, incorporate tithing into their financial plan, use credit responsibly, and develop a mindset of financial responsibility, you can equip them with the skills they need to navigate their financial lives successfully. These lessons will not only help them avoid common financial pitfalls but also set them on the path to financial independence and prosperity.

Randell Tiongson is a registered financial planner at RFP Philippines. To learn more about financial planning, attend the 109th RFP program this September 2024. Email info@rfp.ph or visit rfp.ph.


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