Teaching your teenager how to handle money properly is something that can have a positive effect into other areas of their life. Here are the 5 BEST financial tips you’ll want to teach to your teen!
Finances probably aren’t something most teenagers want to talk about – agree? But I’m here to tell you that it’s never too early to start.
With three teenagers at home, and several “on the way”, my teens are all too pumped to be able to drive their own car and have their own money to spend. They are gainfully employed, and already starting to discuss what college they want to go to. They have made mention that they will live at home and pitch in food and rent.
(I’ll definitely be marking their words for when they turn 18!)
With their newfound freedoms, your teenager will also find themselves needing to prepare for their financial future as well. At some point, mom and dad are going to stop footing the bill for fun outings with friends, weekend trips to the mall, and even fuel for the car.
Thinking back to my teenage years, my parents diligently worked on cutting back little by little until I turned 17 – at that point, I was working part-time, and going to college full-time – though I was still living at home, that money for gas, fun, and outings definitely came to a screeching halt.
It really was the best wake-up call to learn how to prepare myself for what was ahead: military service in an unfamiliar area, with unfamiliar people and responsibilities that were expected of me. Yikes and yikes. It was a very scary and overwhelming time.
Here are some of the best lessons you can teach your teenager to prepare them for financial success:
Show them how to make a budget
Sit them down and discuss money with them – find out what they like to spend their money on and help work out a written plan with them. Don’t do it for them, but allow them to give you their mature input, after all, this is their budget.
If you think the pieces aren’t going to fall in the right places, by all means, take the opportunity to correct them or guide them in the right direction. But help them understand that getting in the habit of writing things down can help them even more once their income becomes more substantial and responsibilities become more fierce.
Teach them about the importance of long term savings
One of the biggest advantages of teens is the fact that they have time on their side. Although for many kids, the biggest goal is owning their own car, it doesn’t need to involve a car payment – with time on their side, they can begin to put away money each month for a specified period of time to pay cash for their vehicle.
That goal setting will help them establish patience, and hopefully help them progress onto bigger and better things – starting an early retiremtn fund (after all, with time on their side the power of compound interest is huge!) They may also learn the importance of how to be grateful instead of the hot pursuit for the next best thing.
Teach them how & why they should find employment
While we want our kids to enjoy being kids for as long as possible, it is important to cut the strings, and help them get a job. No more paying for all of their expenses. This will help them financially. It will give them an idea of what kind of pay they can expect, without having a college degree. As time goes on, they can decide if they want to pursue a college degree or keep working.
Early exposure to goal setting through due diligence and effort will help establish patience and a sense of pride, which can help them as they progress through life.
Teach them how to set short and long-term goals
Where does your teenager see themselves in about five years? Are they still planning on living at mom and dad’s house? Maybe they looking forward to being out on their own, with a place of their own to call home. It is important to have goals to work at, so that saving money will not seem like such a drag. Being a teenager is the perfect time to save money. They aren’t responsible for major bills, but they’re still old enough to understand the basics of money and start paying those small bills.
Teach them to stay clear of credit cards
Opinions differ on this subject, but a teen with a credit card can be a very dangerous thing. Dispel the myth that credit cards are essential for establishing credit (because they aren’t!) Help them understand that credit cards are for people who want to make borrowing money a habit that follows them through their entire life.
Instead, help them understand the importance of being happy – being satisfied, and being content. Instead of looking for things to fill an emotional void, be content with the things you have, and work towards your long-term goals through due diligence and effort.
It’s natural to want to continue to take care of your teenager in every way possible. However, every teenager needs to understand the value of money and where they fit into that role. Teaching your teenager how to handle money properly is something that can have a positive effect into other areas of their life – relationships with others, with family and even with themselves.
Love your kids enough to spend the time to help them learn and understand, because if you don’t, then someone else will.