Students aren’t known for having responsible spending habits. In fact, they have a bit of a reputation for wasting their loans on shopping sprees and boozy nights out without thinking of the consequences. Before they know it, they have a mountain of debt and are living off beans on toast in order to pay the month’s rent.

This careless behaviour often occurs because students haven’t had any prior experience with handling money. But teaching them these skills in their teenage years can get them into the habit of taking responsibility for their own finances before they leave the nest and have to fend for themselves.

A fifth of parents surveyed by online student bill-sharing tool Split The Bills said they teach their teenagers how to budget. However, there are several methods parents can adopt to help prepare their children for paying personal bills in the future.

The value of an allowance
The Split The Bills survey revealed that 20% of parents teach their teenagers money management skills by giving them pocket money for doing chores.

According to Ashley Tate, chief executive officer at Split The Bills, pocket money is a great way to introduce children to the notion of being responsible for money. Receiving an allowance as a reward for completing chores or achieving good grades in school shows young people the value of hard work.

Another idea is to encourage your child to put their pocket money in a piggy bank—an approach 8% of parents in the Split the Bills study said they took to help their teenagers learn how to save.

Once a young person finds employment and begins to earn a salary, this experience with money teaches them the benefit of budgeting and directing part of their wages into a savings account.

Spend money wisely
The younger generations are known for being frivolous with their money. In this study by Drapers, 93% of people surveyed who were born in the late 1990s or early 2000s—known as Generation Z or Centennials—buy new clothes every month. And in this research, an astonishing 95% of millennials—roughly, people aged 21 to 37—admitted to impulse purchasing.

The best way to prevent children from buying on impulse is to lead by example. If you’re making unnecessary purchases every weekend, your teenager will consider those outgoings as normal. Instead, explain why you’re choosing not to buy something that isn’t a priority or an essential item.

A study by Yes Marketing found that social media influenced more than 80% of Centennials’ purchases. Despite this, it’s important that teenagers know not to give into peer pressure or buy things purely because they’re a trend on their Instagram feed.

Simonne Gnessen, founder of Wise Monkey Financial Coaching and co-author of the book Sheconomics, believes this behaviour stems from a lack of self-esteem. She urges parents to help their teenagers rediscover their confidence so they don’t feel the need to buy items simply to mimic their friends or to fit in.

Without being educated on how to handle money, students will often make mistakes when they don’t have a safety net to fall back on. By taking away the pressure of paying rent and bills and getting into debt, parents can help their children acquire these valuable skills that will undoubtedly serve them well throughout their entire lives.

Survey data
Question: “How do you teach your teenagers to handle money?”