A lot of parents usually find it difficult to say no to their kids. More often than not, you end up giving in to their requests. Whenever they approach you and ask for the latest mobile phone or the trendiest gadget, you always want to indulge, especially when they play the puppy-eyes card.
While there’s nothing wrong with providing favours now and then, as a discerning parent, you should be able to draw the line between what is acceptable and excessive, early on. This way, you can teach them the value of managing their finances and the rewards, both extrinsic and intrinsic, that they can earn from their efforts.
What if one of your teenagers goes to you expressing their desire to buy a car? Do you simply give in? Or do you firmly say, “No”? Here are some advice that you can use to approach this situation.
Introduce Financial Education
The only way your child will be truly ready for a car purchase is to equip them with the right financial knowledge. And this doesn’t mean setting aside a few dollars from their weekly allowance alone.
Start by teaching your kids that what they save should not be just for their car, but there should also be a certain percentage saved for their future as adults (financial freedom). You want them to understand that they are building for their future, and not just saving money to spend it all of.
Volunteer to help them invest a part of their savings through money market securities that mature within a year or even a shorter term. If they want to put their money in a time deposit, sit down together and help them compute the return they’ll get after a year.
You could also allow them to discover for themselves which wealth-growing options they would like to apply for, helping them grow and aspire for stable financial circumstances in the future. The more involved they are in choosing securities, shares, fixed interest investments or investments that you may be planning for them, the more financially responsible they will be when they are grown-up.
Schedule an appointment with a financial advisor who could assist your teenager with the investment opportunities that he or she is interested in. Remember, it is never too early to start introducing your child to money management practices. More than anything, children imitate what they see.
If you want to raise a child armed with a good portfolio, now is the time to start. Speak to one of our savings and asset-building experts today.
Speak To Your Child About The Costs Associated With Buying A Car
Sit down with your teen and help process that affording the total price of the car they want to purchase doesn’t mean the conclusion of their vehicle ownership journey. Speak to them about the regular fuel expenses, costs for engine maintenance, as well as the car insurance they need to renew every year.
Discuss all these points as if you’re talking to an adult, but never put on a discriminating tone. Just because you’re talking to a minor does not mean they are not ready for the responsibility of owning a car. Ensure that they understand the financial burden that car ownership can bring, and equip them to take on the challenge.