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Wednesday, October 9, 2013

Tips for Teaching Your Teen About Money Management

Tips for Teaching Your Teen About Money Management 

When your teen is old enough to open a bank account or open a debit card, there are certain rules and facts they must understand before they are allowed free rein of their money.  This is your chance to teach your teen about bills that must be paid, obligations that must be met, and savings that should be grown.  Before your teen leaves home and starts to manage their own life, they must have the experience they need to manage their own checking account, keep money on their debit card, and handle their own expenses.  An open discussion between you, your spouse (or any other adult in the home) and your teen can save your teen thousands of dollars in the future.

Talk About How To Budget

It doesn’t matter if you are the worst example of staying on a budget on the planet; you still have valuable lessons to teach your teen.  If your teen simply deposits their paycheck in their account, and spends what they’ve got, they’ll never learn the value of budgeting and saving money.  Talk to them about what it means to stay within their set budget, and show them examples from your own monthly budget, both successful and not so successful. A prepaid debitcard via is also a great way for teens to learn how to stay on a budget. It allows parents to remain in control while giving their teen the financial freedom they’re striving for.

Discuss The Importance Of Savings

Your teen may pay all their bills on time, and never have overdraft fees from their account, but living paycheck to paycheck can wear on even the best money manager after awhile.  Teach your teen the importance of having a base for a savings account in order to have cash available when it’s needed.  Savings accounts can be used for the following things:

·      Emergencies, such as a car breaking down
·      Special purchases, like a new phone or car stereo
·      Yearly events, like school fees and new school clothes
·      Big expenses, like college tuition
·      Unexpected expenses, such as an injury that causes your teen to take time off work

Encourage your teen to set goals within their savings accounts in order to ensure that they have the money they need to purchase the things that they want.

Encourage Your Teen To Earn

Sixteen is the magical number where most teens start looking for a job.  At this point, they are legally able to work and pick up some of their own expenses.  Although it can be difficult to balance schoolwork, extracurricular activities, and a job, this is an important skill to learn to prepare for the future.  As an adult, your teen will be asked to successfully manage their time in a way that allows them to have a family, meet their financial obligations, and still have a great life.  The sooner they learn how to balance several things, the happier they will be in life.

The Pain Is Worth The Gain

Although this conversation can be painful with your teen, and you may have to set some hard boundaries, the benefits will be much more than the disadvantages.  Teaching your child about budgets, savings, and earning money fulfills one of your major steps on the list of completing your parenting duties.