“No teenager in their right mind – no matter how studious they are – wants to become financially literate.
“If you sat down and said, ‘Hey Tim, how about we open a spreadsheet and talk about how to make a budget.’ Tim would say, ‘Hey. How about you f**k off.'”
That, right there, is another straight-talkin’ truth from The Barefoot Investor himself, Scott Pape. One parents will know all too well.
But, speaking to Mamamia, the best-selling finance author said there’s still a relatively simple way to sneak some solid money-managing lessons into your teenager’s Netflix-addled noggin.
Via their first car.
“My secret source in financial education and for raising a strong, confident adults is to focus on hormones. And the hormones don’t get any more excited than by the prospect of having an ultimate freedom machine,” he said.
Sure, you could buy them one, but “How well adjusted is that child going to be if they get a brand new car given to them by mum or dad?” Pape said. “I don’t care how rich you are. If you buy your child a brand new car for their 18th birthday you’re an idiot.”
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As a dad himself, Pape appreciates that parents want their children to be safe behind the wheel. But he argues that when a child is gifted a $40,000 sedan straight off the showroom floor, they’re not only receiving the wrong message, they’re missing out on a huge opportunity to learn life-long skills around money management.
“I think that encouraging your teenager to work and to save up, even if you match them dollar for dollar, is what we call one of life’s teachable moments,” he said.
To make the most of it, Pape advises parents to use their teen’s desire for independence as a tool: tell them before they start learning to drive that you won’t be putting them on your car insurance after they turn 18.
The thought of taking their girlfriend/boyfriend/friends out on the handlebars of their fixie will generally be a pretty good kick up their skinny jeans.
“You should be actively using that as a carrot to teach your kid about saving, finding a good deal, working out the ongoing costs, really thinking through it,” he said.
“You’ve got three years or so between when the age they can get a job and when they can get a car to actually work on that plan. And it can be really powerful.”
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