It is highly likely your foster teen has not been introduced to managing money properly. His biological parents, who may have neglected him, probably haven’t taught him this particular life skill. Lack of education in money management can set him up for financial difficulty as an adult. Teaching your foster teen financial responsibility is one of the most valuable principles you can instill in him.
With most teenagers, instant gratification is par for the course. Just walking through the mall can be challenging because it has everything connected to popularity. From the hottest pairs of Chucks to the trendiest jogger pants, teens may feel like money is burning holes in their pockets.
However, for foster teens, there are added challenges. Their parents may have never had the money to buy name brand clothing. Foster teens might already feel like they never fit in, and nothing brings a blow to their self-esteem like getting picked on for being different.
Additionally, teens in care may have never had lessons on the importance of fiscal responsibility. The way they view money is based on what they have learned by watching their parents, who most likely have not been taught how to be financially responsible themselves.
Teaching Your Foster Teen Financial Responsibility: Budgeting and Saving
For your foster teen, the idea of budgeting and saving may be foreign. His spending habits may seem impulsive, but he might have had to spend money frequently as a way to survive. For example, he may have had to buy snacks or junk food so he wouldn’t have to starve once he got home. Now that he is older, it’s time for him to unlearn what has become a way to survive prior to coming into your care.
This may be a long and arduous process.
It is important to teach him about budgeting and saving because what he learns today will have a direct impact on his tomorrow. If he learns how to save and properly budget now, he will be able to obtain what he needs in the future, like his own car.
Teaching him how to save is a great way to show him how to be financially responsible. Visit your local bank and have him set up his own savings account. Allow him to fill out all of the required paperwork and speak to the representative at the bank. Taking these steps can be the beginning of showing him the benefits of saving money and spending it wisely.
As his foster parent, you can strategically teach him about the principles of budgeting and saving.
For instance, if he asks to withdraw some of the money, don’t refuse his request. If you do, he may become discouraged from saving his funds. However, having his money in a savings account will make it less likely for him to spend it quickly.
Teaching Your Foster Teen Financial Responsibility: Wise Financial Decisions
By now, your foster teen should also be aware of the hard work it takes to earn money. If he is younger – and to reinforce this principle – you may feel compelled to give him an allowance. With that, it is important to make sure he is helpful around the house and obeys the rules of the home.
When you give him his allowance, provide it during a time when he cannot spend it in a hurry. Instead of a Friday night when he can go directly to the movies, give it to him on a Sunday evening when he has to prepare for his week at school. It is essential your foster teen learns how to properly manage money so he can make wise decisions.
If your foster teen is old enough, getting a job is a great learning opportunity. However, you will need to discuss this with his caseworker to make sure the Department of Child Protection and Permanency’s (DCP&P) guidelines for employment opportunities for foster teens are being followed.
As he earns money, helping him prioritize his financial needs will allow him to spend it on more worthwhile things. For example, instead of buying expensive sneakers that he will outgrow, he can pay to go on a school trip with his peers that he will always remember.
Each time he gets paid, encourage him to deposit a certain amount in his savings account and allow that to accumulate over time.
As he receives checks on a consistent basis, he can consider a few questions:
• How much money do I make after taxes?
• How much do I need to spend?
• How much will I have left over after I pay for my needs?
Asking these questions will help him become disciplined and make good choices about how much he should spend and how much he should save. Learning this now will benefit him in the long run, especially when it comes to paying bills, such as rent and cable, on time consistently.
Teaching Your Foster Teen Financial Responsibility: Beware Credit Cards and Identity Theft
If your foster teen wants a credit card, it’s a great time to sit down with him and explain the benefits and possible traps that could bring.
He may look at a credit card and think it’s free money. You understand that cannot be further from the truth. Stress to your foster teen that credit cards are a form of borrowing and debt. Interest rates are real and can overwhelm and financially snag him if he does not use the card properly. As you know, the card should not be used to purchase anything he cannot pay back.
Unfortunately, your foster teen’s opportunity to prove he is financially responsible may have already been stolen from him.
Because of the abundance of paperwork containing sensitive information like social security numbers, foster teens are at high risk of identity theft. Congress passed a law that requires child welfare agencies throughout the country to provide credit reports for foster teens ages 16-18, along with counseling to resolve identity theft before aging out of care.
To ensure your foster teen is not a victim of identity theft, reach out to his caseworker about this initiative.
There are debts that are necessary, like student loans for college. Higher education is a goal your foster teen can strive for, and there are programs – like the New Jersey Foster Care (NJFC) Scholars Program – that can assist him. While this program, and others like it, offers economic assistance, it doesn’t cover all costs. Since this is the case, it is paramount he starts saving for college now.
In the case of other long-term debts, such as mortgage and car loans, it is essential he is in a position to afford the monthly payments. Everyone wants to have the best, but your foster teen needs to know it’s important not to live beyond his means. Additionally, to be able to handle the payments, he needs to have a good credit report that shows he is responsible. If he wants a good job, this is also important, as many potential employers access and consider credit reports during the hiring process.
embrella offers a course for licensed resource parents in New Jersey that gives great tips on helping your foster teen manage money called Kids and Money.
Once your foster teen leaves your care, it’s important you emphasize these principles so he can apply them no matter where he goes. If he follows these steps, he can have the power to make his own financial choices and break the cycle of fiscal instability.
