Money management skills aren't likely to be a priority for teens. Economics and personal finance classes are only required in 20 percent of all U.S. high schools. This means teaching these skills is a parental responsibility second only to food, clothing, and shelter. It's critical for you to play a role in raising financially literate adults.
Teach Teens to Be Credit Smart
Be cautious when giving teens credit cards. Consider sharing a credit card or auto loan with them. Use them to explain how credit works and how interest can grow and make purchases increasingly expensive over time.
Help them realize this can take a huge bite out of money they may be trying to save for the future. Encourage teens to do with less and be thrifty to achieve saving for goals. Help them understand how credit scores work and their impact on qualifying for loans in the future.
Set Teens Up with Their Own Back Account
Start high schoolers out with a special teen checking account that gives them independence with supervision. As a joint account holder, parents maintain complete access.
At the same time, let your teens monitor the account with their phone or by going online. Add allowances or money they earn and let them use a debit card linked to the account. Viewing transactions will help them begin to develop a sense of budgeting.
Teach Budgeting Skills
Rather than buying clothes, a tank of gas, and other basics for teens allot an amount of money each month or so and give them the responsibility of making it last until the next “payday.” Help them explore online budgeting tools and other ways to create spending plans and stay on track. Realizing some money is for a certain purpose goes a long way in teaching them to resist impulse buying.
Teens that don't already have jobs are often encouraged to do so when managing their own bank accounts. Create a mindset for saving by having them add a savings account. Encourage them to pay themselves first by determining how much money they will need and when. If they have a big purchase in mind guide them in setting a goal for working toward it with savings.
Teach Teens Economics of Higher Education
The latest student debt survey shows that the average college graduate owed around $37,172 in student loan debt. As teens plan for college, guide them into not incurring more debt than they will reasonably be able to pay off in the future. Help them crunch the numbers and explore options such as refinancing student loans with lower interest rates. Look for lenders that give options according to loan terms and eligible degrees.
Teens can and should be expected to participate in financing their education. Talk with them about their options for schooling. Make it clear that they will at least work and earn money to help with some expenses like clothing and entertainment. Guidance counselors can provide information about scholarships, grants, and student loans.
Teaching teens to manage money wisely is invaluable to them as they phase into adulthood. Teaching money smarts today can prevent them from becoming breeding grounds for debt as young adults.
3/12/18 Thank goodness…the rain has finally subsided! Looking forward to more beautiful sunny days like this 🙂