Money and consumption play a major role in our society. That is why it is crucial to learn how to manage them responsibly from an early age. Financial literacy is now a key skill that can be developed step by step with the right guidance from parents.
«Ideally, learning about money and the skills involved should not begin with a young person's first wage, but well before that,» says Anja Meier of Pro Juventute. She is responsible for media and policy at the foundation.
Anyone who shares their own thoughts on money encourages people to think things through.
Pocket money provides an age-appropriate learning environment in which children gain their first experiences with money. This is often followed later by a young person's allowance, which covers not only leisure spending but also essential expenses. In this way, young people learn to budget their money and develop a sense of what life costs.
The role of parents
Parents play a key role in guiding their children along this path. They help their children to develop a responsible approach to money. «Pocket money and a youth allowance are tools for practising how to manage income and expenditure,» says Meier. «It is just as important to talk about money and consumption around the family dinner table.»
Parents also play an important role as role models: sharing one's own thoughts encourages reflective behaviour. Why is something bought – and why not? Money is still a taboo subject in many families, yet it should naturally be part of everyday life. An open discussion helps young people to understand how wages are earned and how informed consumer choices are made.
Taking responsibility
As their children get older, parents can gradually hand over more and more responsibility. This enables young people to learn to manage their own money and set priorities. «Being allowed to take on responsibility within a safe environment is a vital piece of the jigsaw on the path to financial literacy,» says Anja Meier with conviction. The transition to independence takes place gradually: from pocket money, through a youth allowance, to their own income.
If the money runs out before the end of the period, this can be a valuable learning experience: «Parents shouldn't advance any money if it hasn't been budgeted properly. This is the only way the child will learn to put off their own wishes until there is money available for them.» At the same time, it is important to keep the lines of communication open and to reflect together on what could have been done differently. If the money is budgeted wisely, this should also be recognised. «This trust, and in particular the confidence shown in the child's ability to manage their finances, has a positive impact on the child's development and the relationship between parents and child.»
A budget definitely helps you keep track of things. Fixed costs, in particular, are often underestimated.
Anja Meier, Pro Juventute
The first pay cheque has arrived
Receiving their first apprentice's wage marks the start of a new chapter. For many young people, the amount seems high at first, but it also brings with it new responsibilities. «More freedom also means more responsibility,» says Anja Meier. In principle, the money they earn themselves belongs to the young people.
However, it makes sense to discuss together which expenses the students will cover themselves. Do they contribute towards accommodation and meals? Do they contribute to shared expenses such as holidays? Which subscriptions or other living costs will they cover themselves in future?
«A budget definitely helps you keep track of things,» advises Meier. It shows how much money you have available and what it is being spent on. «Fixed costs, in particular, are often underestimated.» Once you reach the age of majority, at the very latest, other issues come into play: more expensive health insurance, taxes and other types of insurance.
One key rule always remains the same: expenditure must not exceed income. «As well as covering day-to-day expenses, it's worth thinking about saving early on. Having a little nest egg or saving for bigger treats, such as driving lessons, provides security and opens up new possibilities.»
Further information
- The apprentice's wage
What's the difference between gross and net pay? How will my financial situation change when I receive my first pay? This film by Pro Juventute explains it all. - The Budget Game
Pro Juventute's Budget Game helps you practise managing your income and expenditure. Click here to play the game.
