The Money Lessons Every Teenager Needs to Know
By Interior Savings
July 20, 2016
Do you remember what it felt like to be close to completing high school and about to take the leap into adulthood? Likely you were excited and couldn’t wait to be on your own and making your own decisions. Ice cream for dinner, anyone?!
It’s an exciting time for your child, and maybe a source of anxiety for you. Truth be told a lot of parents wonder if they are doing enough to teach their kids about money and finances. Here are three money lessons to help your teen transition into adulthood.
1. If you can Dream It…
What does goal-setting have to do with money? Everything! Talking to your kids about what they want to achieve in their lives is an important step in creating financial fitness. What are their short-term goals? What do they foresee for the future? Do they want to buy a house one day? Or maybe they want to travel the world before settling down?
Help them figure out what steps they would need to take in order to achieve these goals. If they are aware of what they need to do to get where they want to go, they’ll be more inclined to weigh their spending decisions, even at a young age. “Should I buy that shiny new bike or put that money into my travel fund?” It’s all about choices and balance.
2. Living on a Budget – Not on Hope
It’s never too early to start talking to your child about budgeting. As they get older, helping them to create their own budget will give them the hands-on experience they’ll need when they make the leap into the real world. Share the family budget; ask their input on financial decisions and talk through why the family may choose one way versus another.
Create opportunities for your children to take-over the grocery budget and be responsible for choosing the groceries (with some guidance at first, of course) and making a meal or two.
Show them how online banking, including bill payments, work. Get them to do some of the family bill payments so they get comfortable with the process and an understanding of the important role that budgeting plays in day-to-day money management.
Using these real-life situations are far more interesting than just talking about it. Putting the lessons into practice creates understanding and the ability to make good decisions when the stakes are much higher.
3. High Score Wins
Perhaps one of the most misunderstood topics related to money is credit scores. How do they work? What do they mean? How can you maximize them? The earlier that kids understand the importance of their credit scores, the more likely they will make responsible decisions. Having said that, kids are human too and will make mistakes. They need to know that although there are consequences to less than responsible decisions, there are ways that they can fix the impacts from some missteps.
If you’re not comfortable with your own understanding of credit scores, check out this great infographic on credit score basics.
There you have it; 3 must-teach money lessons that every parent should share with their teens. Though the lessons sound simple, their impact is big. You’re helping your teens build the foundation from which their future decisions will be made from, and creating some peace of mind for yourself.
Have questions? Get in touch. We’re always happy to help.