Money lessons are essential to learn at a young age. It's time to talk to your teenager about money. It's during the teen years that kids appear to be savvy about money.
At this time, they should establish good financial habits that can pay dividends in the future.
Here's a primer of the five money lessons you should discuss with your teenager now.
How to Create a Budget
Teaching your kid how to track their money before receiving paychecks is the best approach to saving money.
If your teen has a part-time job, set up a budget document indicating how much money they're getting and how much they can spend and save.
Refrain from sounding like you want to "control" their money by creating a fictional budget worksheet.
Explaining in bites, make them understand how they can afford the things they want while still working towards a larger goal.
Set up a checking account and debit card for your teenager and talk to them about avoiding debts. A debit card is essential.
This is one of the best money lessons to understand. We're in an increasingly cashless society. It can be challenging for teenagers to pinpoint the real cost of their expenditure. Therefore, you should take your teen through financial transactions.
When your teenager hits the 16th birthday milestone, a real-life situation is ready for a driver's license and freedom to hit the road. It's a freedom that comes with a hefty expenditure for most parents.
To help ease the situation and what's to occur soon, sharing your teen's insurance policy is crucial. Additionally, share the cost of gas and maintenance.
Letting your teen watch you pay bills can help show the importance of avoiding thrifty living.
The Dangers of a Credit Card
According to a recent study by Sallie Mae of 800 students aged 18 and 24, 56 percent don't pay off their monthly balances.
Most are unable to pay off their student loans after graduation. Due to this reason, they may find themselves financially trailing behind even before starting their career.
Privacy may not sound like a financial concern, but it is. Identity theft can cause havoc on your teen's economic life. It may end up costing them a lot of money. Thus, your teen must develop a habit of guarding their Social Security Number and sharing it only when necessary.
The same measures apply to credit card and banking information.
While on privacy protection, you can teach your teen the importance of online banking. Transferring money to their savings and avoid involving other parties.
Having them indulge in online banking without enough knowledge can be risky, and your teen may be in for a rude awakening
There is advanced malware that organized cyber rings use to drain cash from their targets. They're no longer targeting big banks; they're zeroing on consumers' PCs. Your teen could be a potential victim.
Using a firewall and updating security software is among the various ways your teen can protect themselves from online banking disasters.
Also, avoiding clicking on phishing hyperlinks, mostly in emails, is vital.
Checking and Savings Accounts
Checking and savings accounts are the basics of everyone's financial life. It's funny that there are adults who cannot balance a checkbook these days.
Educating your teen how to write their check and record it in the register as soon as possible is an absolute must in any consumer-based economy.
Your teenagers cannot spend more than they're saving.
Saving a portion of what they earn is crucial. It could be ten percent of everything they make daily, weekly, or monthly. It's the best advice they'll have throughout their financial life.
Teaching these money lessons to your teenagers may be an addition to your busy schedule, but it's worth it in the long-run. Creating self-sufficient adults is better than being the all-time go-to during emergencies.