Many parents don’t talk about money with their kids; however, it’s an important life skill. You can set your teenager up for success if you start teaching them financial skills early.
Here are a few financial skills you should teach your teenager so that they have a plan for the future.
How To Budget
One of the most important financial skills you can teach your teenager is how to budget. Show them how to track their income and expenses to stay on top of their finances.
Help them set up a budget for their allowance or part-time job earnings so that they can learn to live within their means. Teach them how to save up for big-ticket items.
How To Set Up Bank Accounts
Another critical financial skill to teach your teenager is setting up and managing bank accounts. Teach them the difference between a savings account and a checking account. Help them understand how interest works and how it can help them grow their money.
Show them how to keep track of their account balances, so they don’t accidentally overdraw. Teach them about fees associated with bank accounts and how to avoid them.
How To Build Credit
If your teenager plans to borrow money for college or a car, they’ll need good credit. You can help them build credit by cosigning for a credit card or taking out a small loan and helping them make the payments on time.
Talk to them about the importance of paying their bills on time and how late payments can damage their credit score. Building credit in and right after high school can help your teenager get better rates when they’re ready to borrow money for major purchases.
How To Save Money
Saving is one of the most important financial skills your teenager can learn. Show them how to set up a savings account and help them make regular deposits.
Teach them about saving for emergencies, retirement, and big-ticket items. Help them understand how compound interest works and how it can help them grow their money.
Encourage them to set aside a portion of their income each month to build their nest egg.
Most kids don’t get taught financial skills in school, so it’s up to you to ensure your teenager has a plan for the future. By teaching them how to budget, save, and build credit, you can help them set themselves up for financial success!
These skills will benefit them throughout their lives, so start teaching them early. Talk to your teenager about money often and answer any questions they have. The more you talk about it, the better equipped they’ll be to manage their finances as an adult.