What to Teach Your Teens About Personal Finance
As kids grow older and start to mature, so should their attitude towards money. While your teenage son or daughter might have some experience with earning and saving money through an allowance, they still might not fully understand what it means to be fiscally responsible.
Luckily, there are some simple things you can teach them to better prepare them for financial responsibilities of adulthood.
1. The Value of a Hard Day’s Work
The summer is the perfect time for teens to find part time work. Whether it’s working as a camp counselor during the week or mowing lawns on the weekend, there are tons of jobs out there for teenagers looking to earn some extra cash. Encouraging your teen to find a part time job is a simple way to introduce them to a multitude of financial responsibilities. They’ll learn how to search for a job, conduct themselves during an interview, and how to deposit their earnings into a checking and/or savings account. Plus, they’ll have earned themselves a solid chunk of change in the process. It’s a win-win for everyone!
2. Make Saving A Habit
Whether it’s from their job, their allowance, or even a birthday gift, encouraging your teen to save as often as possible can be a huge benefit to their financial future. Encourage your teen to put their money towards a large purchase and to avoid smaller, frivolous expenditures. It’s also important to teach them the power of compound interest, and the monetary gain to be had from saving early and often.
3. How Credit Cards Work
While your teen might not have much experience with credit cards outside using your own, it’s important to explain to them the vices and virtues of credit. Taking the time to sit down with your teen and going over the ins and outs of interest and the importance of maintaining a good credit score can do them wonders down the road. Taking the time to talk to them now could save them from making major credit mistakes in the future!
4. How to Differentiate Wants From Needs
Knowing how to properly prioritize your spending is the first step towards financial wellbeing. While your teen might be tempted to blow their entire paycheck on a new outfit or video game, you should show them the importance of taking stock of their needs before indulging in their wants. Pass the responsibility of purchasing things like school supplies, more practical pieces of clothing, and lunch money on to them so they can learn how to appropriate their money. Learning to manage simple situations like these can help them develop a great money mindset and budgeting skills for the future.
Regardless of how you decide to go about it, educating your teen on personal finance is one of the best things you can do to provide them a happy future. From college, to the working world and beyond, the education you give your son or daughter will equip them with the skills to handle tons of financial situations. Believe me, they’ll be grateful for it in the future.