As a parent, you want to ensure that your teen makes the right choices. Learning better management skills is a part of this whole process. The basics that you teach your children when they are young come in use when he or she becomes a teenager.
But still the teen years happen to bring their own challenges. Which is why talking to your teen and making him or her understand the value of money management is important. Let’s look into a few tips that can help your teen move towards the right track when it comes to establishing a strong financial foundation that leads to a better, more stable life…
#1: Create Spending/Saving Patterns
Your teen needs to understand the value of spending, saving and sharing. Which is why you need to start instilling these values in him or her. Begin by discussing the 10 percent of the teen’s earnings that would be used for charitable purposes/contributions. This teaches your teen the value of “giving back”. After that, take another 40 percent and save it in his/her savings account. What remains is 50 percent that can be used according to the teen’s will and wish. By setting these simple to understand patterns your children will be able to develop better budgeting skills.
#2: Begin on the Path to Build Credit
Set up a checking/savings account for your son or daughter and make regular deposits in it so that account is in good standing. Also show him how to use credit cards the right way, and take advantage of offers such as the Upromise credit card rewards. It’s your responsibility to have your teen get started on the right financial track so that things are easier for him/her in the future when it’s time to purchase a new vehicle, secure different loans or mortgage a home. What’s more, having a savings/checking account will let your teen learn the ins and outs of banking/using ATMs.
#3: Create and Set Goals
Ask your teen to create a list of different items/special gifts that want to buy with the money they get. And have them set a practical/reasonable date for the accomplishment of this goal. Having an end goal or objective in mind can help your teenager save money needed to buy that special gift or item. Not only that, it also serves as a great lesson on how such goals can be met with effective money management.
#4: Begin Saving for Retirement
Is it too early to think about your teenager’s retirement? Absolutely not. Once your teen hits the age of 18 he/she should seriously consider opening an IRA. For example, a 45 year old investing $25,000 per annum for retirement will obviously end up with only 50 percent of the assets as a 21-22 year old who puts in the effort to invest at least $5,000 a year. What’s important to understand here is that even the smallest of the savings can become a good, respectable fortune if it is given enough time.
The fact remains that teen years can be huge challenge for even the most patient and forbearing parent. However, by instilling the right values and by teaching crucial lessons about money management in the early stages, you will be giving your teenager a pathway to a successful life that’s made up of productive financial habits.