How to Help Teens Manage Money
We've talked a lot about how expensive raising children can be in this country, but when they reach teen-hood, this is a great time to teach them the value of all that money. Parents play an extremely important role in how children will treat and manage money as adults, so the more you can support teens in this process, the better equipped they will be -- in college and beyond.
These are a few tips mentioned in a recent piece from Investopedia. Looking back on your own youth, what are some tips YOU would recommend for teens? Leave your ideas in the comments below!
1. Always Save a Portion of What You Make
It makes sense right? All adults should "pay themselves first" so why shouldn't teens? This is a good teaching tool that can instill responsibility and the habit of saving for a rainy day. Parents can teach them how to open an account at a bank or credit union and how to move money between a checking and savings account. If they have built up a good amount in savings, they can consider opening up a college savings account like a 529 plan, which can be used to pay for college. A huge benefit of this type of account is that any investment gains are tax free for use in higher education.
2. Budget Money For Fun Things
Of course work is important, but play is equally important. Especially when you're still a kid! Teens should be able to spend a portion of what they have on anything they want. This can include money for the movies, new sneakers, clothes, etc. They can also set money aside for something they want that takes some time to save for, like a car. The important thing here to teach them how to allocate money appropriately for fun things.
3. Teach Them About Being Charitable
While not a lot of families do this, I personally that it is very important to teach children and teens about the benefit of helping out those who are less fortunate. They will learn there are quite a few people in need in this day and age, even in their own community. Kids will feel good about making a difference and hopefully this will translate into being more charitable and kind as adults. We definitely need more people like this in the world.
4. Provide Guidance On Things They've Never Had to Think About
Teens are not far away from knowing about the realities of life, yet few truly know the types of weird expenses that await them. Mortgage payments, car insurance, property taxes, healthcare costs, credit card balances, dental procedures, etc. -- no teenager has a true understanding of these, and that's where parents can help the most. Walk your teen through how you manage money each month and teach them about different expenses and how to handle them. This isn't meant to scare them, it's supposed to help them learn - keep this tone in mind. (BONUS: Have them read THIS ARTICLE if they want to know just how much a baby will cost them if they might be at risk for that.)