Be open about money matters
“You’ve been under it for fifteen minutes!” Many a parent will try banging on the door to limit their adolescent’s endless showers. Because yes, the energy bill is already so high. A logical reaction, but according to Aisa Amagir, who researched the financial literacy of 15-year-old students, teaching frugal behavior starts much earlier in the upbringing. ‘It is important to talk about money with your child from an early age. I was at a school where students were instructed to discuss the fixed costs at home. Then they came back surprised that apparently they have to pay for water. They didn’t know.’
‘Parents are reluctant to discuss money matters with their children,’ says Amagir, who is affiliated with the Education and Education Knowledge Center of the Hogeschool van Amsterdam. ‘They don’t want to burden them with money worries or don’t think it’s neat.’ As a result, young people’s knowledge of money is limited. Research shows that one third of young people in the Netherlands can barely make ends meet. ‘We know that if young people talk more about money, they later show healthier financial behavior. For example, they save more’, says Amagir. ‘So tell your child what the fixed costs are and what the family budget is.’
Pocket money and clothing money
Giving pocket money and clothing allowance is a good method of getting children to practice on a budget. Children from the age of six can recognize the different coins, so they usually start with pocket money. On average, parents at that age give 1 euro to 1 euro 40 per week. From the age of twelve, a clothing allowance is added. The average student gets about fifty euros a month for clothing. ‘Make clear agreements about what should be bought with that money: whether or not to buy a winter coat? And stick to it’, says Karin Radstaak, spokesperson for the budget institute Nibud. ‘Let your child make a bad purchase or buy an item of clothing in the wrong season. Those are the learning moments. It can be difficult for parents not to come to the rescue, because adolescents can react very badly.’ If your son or daughter comes up with a well-founded proposal, parents can make an exception once in a while and advance money, says Radstaak. ‘For example, that they have found a cheap second-hand copy of an expensive brand sweater.’
Your own bank account and debit card
Nowadays children already have their own bank account with debit card at the age of ten. ‘In the past with cash you had a piggy bank and wallet and you could see quickly enough when the money was running out. Money traffic is now a lot less visible’, says Radstaak. Parents are advised to provide their child with information about protecting the PIN code, digital piggy banks and lending or borrowing money. ‘Young people yelling ‘Are you shooting ahead?’ and then don’t pay the Tikkie they get, they often don’t realize that they are taking on a debt.’
Also discuss the danger of online temptations. ‘We know from research that social media puts young people under a lot of pressure to spend more money than they have’, says Amagir. ‘Explain that influencers don’t always have the best intentions and that they also get paid to promote something.’
Check the bank’s app once a week to see which amounts have been debited. Amagir: ‘Do they remember what they bought? A sandwich in the canteen is quickly bought and forgotten.’
Financially independent
Parents are often insufficiently aware that young people are financially independent before the law on their eighteenth birthday. This means that from that moment on, parents can no longer monitor their child’s account. And more changes: young people can be overdrawn, take out a telephone contract and apply for a credit card. ‘Young people can suddenly spend money that they don’t actually have,’ says Amagir. They also have to arrange their own health insurance and sometimes pay a traffic fine. ‘You often see things go wrong during the transition to 18 years,’ says Amagir. ‘Many MBO students have to deal with payment arrears because they forget their health insurance. They also miss out on a lot of money by not applying for health care benefits or filing a tax return.’ Please go through these changes together. If you, as a parent, want to keep an eye on the account for a little longer, your child can request a power of attorney.