Teenagers are always eager to learn, and it’s a good idea to give them some pointers as they approach adulthood. Knowing what to expect financially will help your kids feel prepared for success. You may not be able to explain everything to your child, but simply telling them what you can will help eliminate most of their anxiety about becoming adults and facing the financial world.
1. Teach How to Budget Money
Your child will understand the value of having a budget once they have an income. But that doesn’t mean you should wait until they have a job to teach them about the wonders of budgeting. It’s essential no matter how much someone makes. A spending plan helps people understand where the bulk of their money goes and how to save for goals.
Every stage of life will have your teenager see more critical savings goals, so you need to help them learn to manage their money effectively before having a steady income.
Examine your household budget to demonstrate an adequate spending plan, as having a real-world example could help your teen understand it better. Your child may then find it easier to build the perfect budget that aligns with their current finances and future goals.
2. Explain Why Debt Is Tricky
Debt is a scary word, and even if your child has no plans to go to college and take out loans, they should know what debt is and what it means for them. It affects almost all areas of a person’s financial health, but carrying a little can be OK, particularly if you pay it off promptly.
For example, carrying a home mortgage or car payment and paying off part of it every month can make a person’s credit score jump. Living debt-free means you can contribute money to any area of your life, but you should tell your teenager that it’s not the end of the world if they take some on. They’ll likely have some sort of debt throughout their life — it’s all about what kind they have.
3. Tell Them What Credit Scores Are
Credit scores can affect your ability to get a loan with a good interest rate, so your child should know how to manage them as soon as they hit adulthood. Keeping a low balance on their credit cards and paying any bills on time should earn them an excellent score. They take time to build, can’t do it all at once, and should avoid any scams that say otherwise.
4. Open a Bank Account
Opening a bank account is the best way to teach your teen about balances and debit cards. Some banks even provide teenagers with their first debit cards. They should also learn how to open an account and understand everything that goes with it, such as writing and authorizing checks.
At the very least, your teenager should have a savings account. The interest rates are higher, so your child will gain more money in their savings than they would in a checking account. Your teen will have more money in the long run and be grateful for the opportunity to get a headstart in adulthood.
5. Learn How to Support Good Causes
As they age, your teenagers will start to formulate causes and stances on specific topics that mean a lot to them. They may want to contribute some of their paychecks to a worthwhile cause. They can learn how to donate to a charity or find businesses that align with their values.
Teach your child to look on a company’s website or elsewhere to find what causes it supports. Your teen might shop at a business if its mission aligns with something they believe in and benefits a group that needs aid.
6. Introduce Them to Money Management Apps
Most people have smartphones. Most everyone agrees that money-managing and financial apps can help people understand where their money goes and aid them with sticking to a budget. Go through some of them with your child and see which ones have the features you’re looking for. Let them make the ultimate decision — you want them to use something that fits best with their personality.
7. Help Them Find a Job
Less than 20% of teenagers have jobs in the modern United States. If your child has the privilege to choose whether or not to get a job, help them find the right one.
Teaching them about the job-hunting process and how to juggle prospects can help them understand what they need to look for in options once they graduate. Knowing what to expect from an application and all the benefits of an offer can help your child turn their job into a career.
8. Understand Credit Cards
Credit cards are a tricky subject. They can carry a massive balance that seems impossible to pay off, and some people think they are bad and should be avoided at all costs. Your teen should know the consequences of not handling a credit card right.
The best part of credit cards is that you can rack up rewards. Teach your teenager that carrying a low balance or paying it off monthly is an easy way to build their credit score and qualify for awards.
9. Build Savings Goals
Having something to save up for is exciting and could give your teenager a sense of purpose. Younger people with goals and savings accounts are more successful in adding to their savings and portfolios as they age. Let your teenager reap the most success possible to make their dreams happen.
Set Your Teens up for Success
Teenagers are ready to learn just about anything as long as you’ll teach them. The world of finance is tricky to navigate, so guiding them along the way as they figure out the mystery of adulthood is bound to help your teenager become well-rounded. Teach them about money when they’re young, and they’ll take that advice into the future.