5 Tips for Teaching Teens About Personal Finance
Life as a teenager means transitioning from childhood to adulthood. Unfortunately, few teens are properly taught the basics of personal finance prior to their 18th birthday. Despite learning advanced mathematics, foreign languages, and world history by the time they graduate high school, most teenagers don’t know the importance of credit, savings, and financial discipline.
The following are five tips for parents teaching teens about personal finance:
Consider credit starter loans
Becoming an adult means being legally able to sign a loan contract. Encourage your teen to apply for a credit starter loan after their 18th birthday. Lenders providing personal loans in San Angelo TX and other communities commonly offer these types of lending options to help people establish a good credit history. Just make you’ve taught your teenager the importance of making the monthly payments on time until the debt has been completely repaid.
Make them authorized credit card users
Adding your teenager to your credit card account as an authorized user allows them to build credit history earlier than if they wait until adulthood. It’s yet another useful tool for teaching teens about personal finance. Although the card is officially in your name, give your teen exclusive access. Monitor their spending to prevent any mischief, but do your best to give them the freedom to use their credit card as needed.
Connect goals with savings and employment
Many teens have hopes and dreams about the future. Parents ought to consider tying these goals in with personal finance. For instance, if your teenager can’t wait to move into their own apartment, discuss how savings and steady income play a significant role in making that happen. If they want a car, sit down and do the math for how much they’ll need to save over the next year to buy one. These and other connections between goals and finance will help teens understand the vital role money plays in turning dreams into reality.
Talk about tuition
More people are going to college than ever before. While that’s good news for the most part, there’s something to be said for the student loan debt accumulating out there. Have a hard talk with your teen about college tuition and what can be done to reduce cost without compromising their academic objectives. Scholarships are the obvious go-to, but grants and work-study programs are other options to consider. Careful selection of student loans, with a preference for financial aid through federal loans, should be a top priority. Even in the event tuition is mostly covered due to an existing college fund or ability to pay out-of-pocket every semester, the value of a college degree should always be put in perspective.
Take them through taxes
The concept of doing taxes is intimidating to many people, even though the process is almost always simple. Don’t let your teen’s lack of tax awareness lead them to fail to file or pay their taxes on time. Start by doing your taxes with them alongside, in order to show how it’s not nearly as awful as everyone says.
Don’t let your teenager become an adult without helping them understand personal finance. Whether we like it or not, money is the driving force for virtually everything in life. The better we are at managing money, the better we tend to do in life.