UNITED STATES—Teaching your children about money is one of the best lessons they’ll ever learn. In fact, the younger they learn how to manage their money, the easier it will be when they get older. Unfortunately, it’s not uncommon for parents to just assume their children know how to budget and manage their finance, which just isn’t the case. That’s why it’s so important to help them master their finances before they venture out on their own. Here are tips to making teaching your teen about money management something they look forward to.
Focus on the Basics
Before you jump into more complex financial matters, you need to start with the basics. Start with the basics, which include creating a budget, saving, and learning how to spend with intention. Impulse spending is also something you need to discuss. Teach them that if they really want something but don’t have the money spare, it’s better to wait then take from bill money to buy it.
You should also talk about the right way to use a credit card. As a student, your child needs to understand how credit cards work and how using them in the right way can boost their credit score. They also need to understand how maxing out their card can have a rippling effect, causing them to go into the negative. That’s why building strong money habits is so important when they’re younger.
Use Real Examples
A teen’s brain isn’t completely developed, so they need real-life examples on how to manage money. Instead of telling your child how to budget for groceries, take them to the store and let them help out. Give them the list and the exact amount of money they’ll need to buy what’s on the list. If they find they don’t have enough, they can then use what they’ve learned to make the right financial decision. You can also take them to the bank to open a bank account and teach them the difference between checking and savings accounts. Finally, it’s a good idea to educate them about not writing checks when they don’t have the money in the bank to cover it. They need to understand how the legal ramifications of doing so.
Involve Them in Your Budget
As your teen gets older, they’ll be able to take part in the household budget. Show them how much money you need each month and compare it your household expense. Explain how you budget your money to make sure everything to paid on time. You should also touch upon what happens if you were to miss a payment or pay late. Also, don’t forget to discuss interest rates and now they affect how much they’ll owe when they don’t pay off balances in full.
Set the Stage
If you’re financially struggling, you need to get your affairs in order before you give advice. If you’re constantly overdrawing your bank account or maxing your cards, you really aren’t setting the right example. You need to be the person your child looks to for advice about their finances, not someone who is always having to borrow from Peter to pay Paul.
