10 essential basics of money management for teenagers
It is essential to understand the importance of investing and saving from an early age. Parents need to ensure that their teenagers are well verse with the different aspects of money management. Right from assisting your teenager to open a bank account in order to pay an allowance to teaching them about saving, you as parents are your child’s teacher as well as their financial advisor. You can help your kids with teen money management by following these tips. These teen money management tips that will help your teenager get a head start on making sound financial decisions.
- Ensure your teenager has a steady income: The first step towards learning about teen money management is to understand the importance of a steady income. A teenager can have a steady income by having a part-time job. Or if they are too busy with sports or any other high school activities, they don’t have time to work, simply keep aside a weekly or monthly allowance for them.
- Ask your teenager set a limit to their income: Once your teenager has got a steady income, teach them how to use the income for most of their expenses. teach them to control their spending and not over limit their budget. If you increase their allowance, they should know how to limit their spending.
- Start a savings or checking account: Another important step for teen money management is to create a savings or a checking account. You can teach your teenager how to make regular deposits, save money, and prevent overdrafts.
- Help your teenager make a regular budget: Sit down with your teenager as well as assist them in fixing a budget that fits their income. A budget would make them understand that random spending of money is a healthy financial habit. When your teenager creates a realistic budget, they can even set short-term as well as long-term financial goals.
- Encourage your teenager to saving: Learning to save is one of the important elements of teen money management. You can simply sit down with your teenager and instruct them to save about 5 percent to 10 percent of their income. This way you will teach your teenager to avoid future financial problems. A substantial saving will also help them to have funds for major expenditures, such as a car or college tuition.
- Teach them financial lessons while shopping: Another great way to teach your teenager about teen money management is when you are at a store with them. You can teach them to pick up best value items with lower prices and teach them how to use coupons. Along with this, you can teach them to buy essentials online at lower prices.
- Set financial goals: It’s very essential to spend time with your teenager in order to help them decide what their future financial goals are and how they can get achieve them. With a sound financial plan with tangible goals, your teenager will have better chances of meeting their financial goals.
- Review their financial statements: You can explain to your teenager that each month, they must go through the details of their savings or checking account statement. This would help them to understand the financial statements in a better way, as well as analyze their spending habits. It would further teach them to make changes in their spending habits and savings.
- Encourage them keep the debt low: An extremely high credit card debt and loan debt can hurt credit scores. Explain to your teenager that it’s important not to take on any debt that isn’t absolutely necessary. By keeping debt low, they’ll be in a better financial situation in the long term.
- Guide them to start their retirement savings early: It’s always beneficial to start thinking about retirement early. You can even encourage your teenager to sign up for a retirement saving plan when they land their first job. You can explain to them that an early start in depositing small amounts can eventually add up to a wealthy, secure retirement.
When you talk more with your teenagers about teen money management, you will help them take better decisions. You can use the tips listed here in order to get started. Always keep talking to your teenager about all types of financial topics. This would further help them get a good idea about teen money management.