What to Teach Your Teens About Personal Finance
As a parent, you are your child’s first and most valued teacher. You want to provide your child with skills and strategies that will allow him or her to become a successful, well-organized adult who will make smart decisions throughout their life.
The teenage years are a great time to start teaching your child about finances and how to be fiscally responsible. If teenage children develop good financial skills while still young, they will be prepared to handle the financial matters that come along with adulthood. Teaching teens the value of money, how to budget and how to save, will help them establish healthy financial habits for life.
Giving them responsibilities by providing real-life financial situations will help them understand how to use earned money wisely.
Here are some ways that parents can teach their children about the value of a dollar and prepare them for the financial responsibilities that lie ahead:
The Value of a Hard Day’s Work
The teenage years are the perfect time for the first job, especially during the summer. Whether it’s working as a camp counselor, babysitting, mowing lawns or working at a retail establishment, there are so many different job opportunities for teenagers.
Parents that encourage their teens to get a summer job are able to teach them numerous lessons related to financial responsibilities. Some of these lessons include learning how to look for and apply for a job, how to handle an interview, how money will have an impact on their lives and the responsibilities that are required to earn it.
Open Bank Accounts
While many parents often establish a bank account for their children when they are first born, it’s important to teach them how to open an account as well as manage a bank account on their own. Parents should bring their teenager to the bank and let them see the process of how to open checking and savings accounts. This will give the parent the opportunity to teach their teenage child the difference between each type of account, how to deposit money, and how to keep track of the money that goes in and out of the accounts. They will also learn how to write checks, balance a checking account, and how to check bank statements for errors.
Get in the Habit of Saving
Many teens don’t understand the value of savings and end up spending money faster than they earn it. Habits are hard to break, and if teens start to develop habits of spending, the chances are that this behavior will keep going into adulthood. Parents should teach teens the value of savings and how to budget. They should also show them how to avoid spending money on frivolous things as well as guide them on how to save money so that cash is available when needed.
Discuss Credit Cards
Credit cards can be a valuable asset, as they help to establish credit. However, how teens use credit cards will make the difference between building good or bad credit. Many teenagers think of credit cards as free money. They don’t necessarily understand that purchases made with credit need to be paid for later on.With credit cards, parents have the opportunity to teach their child how credit cards and interest rates work and that debts need to be paid off. If parents take the time to teach their teens on how to use credit cards properly, they can help save them from making major credit blunders that will affect their financial future.
Finances affect nearly every aspect of life, which is why teaching teens about personal finance is so important. From college to a career and beyond, the lessons parents teach their teens about finance will directly impact their future.