words Al Woods
As a parent, you want the best for your children, and one of the essential life skills they need to learn is managing their finances. Teaching your teenager about money management can be an excellent way to prepare them for the future and help them make responsible financial decisions. You want to ensure your kids grow into well-rounded adults.
In addition to teaching how to respect others and be a compassionate person, they also need to learn how to manage their money properly. Teaching your kids how to be financially literate is one of the most important lesions they’ll ever learn. Not only does it teach them how to manage money now, but it also prepares them to make educated financial decisions when they’re older. Below are ways you can start teaching financial literacy today.
There’s never a wrong time to teach your children about money management. Even from a young age, it’s important that they learn the value of money, the best ways to save and how to spend it wisely. As they enter young adulthood, you can introduce different tips, such as opening a bank account or the right way to use a credit card.
Teaching financial planning is an important way to teach your kids financial responsibility. So, when it comes time to think about paying for college, you need to have a serious conversation about how they are going to pay for college. Since some families don’t qualify for financial aid, they might ask you to be a cosigner on a loan to help with financing approval. While your first inclination is to go ahead and do it, you need to consider how being a cosigner can affect your credit and financial stability.
Teach Them How to Budget
Another important lesson you need to teach is how to make your money go further through budgeting. Learning how to budget money now can save your son or daughter from overdrawing their bank accounts or credit cards later. Talk about the fundamentals of budgeting, including how to set aside money for necessities, spending money, and their savings. They should learn early on that they need to save for things they want and not take from their savings to buy it.
Talk About Credit
Teens as young as 18 can apply for a credit card. That said, it’s imperative that they understand the ways a credit card works. Far too often, even older adults open a line of credit, max it out, and the get slammed with all of the interest on top of what they owe. You need to break down the application process, credit limits, and the right way to use it. Note, not every teen is mature enough to have a credit card, and that’s okay. Let them know that having one is a huge responsibility, so it’s also okay to wait until they have a full-time job and more financial security.
Be the Example
When it comes to money, you need to practice what you preach. No one is going to have faith in someone who can’t manage their own finances. Let them see you creating a budget and paying off bills on time.