Teens need guidance from adults for the best start in life. Let’s take a look at what you can do to help your child prepare for the future.
It’s important to teach your teen about finances at an early age in order to best prepare them for financial independence as they approach adulthood. Teens are very rarely taught about personal finance in high school, leaving it up to the parents to educate them on how to be financially responsible. Promoting the idea of your teen to get a job is the first step towards preparing him or her for financial independence, but what’s next?
Here are a few tips and topics to discuss with your teen when teaching him or her about financial independence this year:
Track Spending
After your teen gets his or her first job, the next step is to open a bank account with your teen. You can continue to help your teen track what he or she is spending by being a part of this account, or you can teach your teen how to track spending on his or her own.
Tacking money has never been easier. With a variety of apps to choose from, teens have the ability to write down what they spent their money on or the app can automatically alert them if connected to their debit cards. Taking advantage of financial technology will help teens get in the habit of tracking money.
Similarly, promote saving a fraction of their pay. Often, teens spend their entire paychecks quickly on frivolous things. Teaching your teen to save 25 per cent of their pay is a good rule of thumb to teach them that they will likely carry over into adulthood.
Set Goals
Setting financial goals with your teen is important and one of the best ways to teach financial independence in 2020. Physically writing out goals is an easy way to teach teens to prioritize what they want to spend their money on.
At this point in time, parents should be cutting back on what they buy and provide for their teens. As teens get closer to adulthood, parents should stop assisting them in finances so much; whether that means stopping their allowance or less frequent money handouts for extracurricular activities. Does your teen want a new phone or another electronic device? Is your teen going away for a weekend with a friend? Sit down with your teen and figure out the cost of whatever it is he or she is working towards and map out financial goals.
Setting goals will not only teach your teen savings. It will teach him or her to find more value in things. Your teen will value a new cell phone more if it took him or her all summer to save for it, rather than getting it handed to them.
Avoid Debt
This is perhaps the most important thing to discuss with your teen in the New Year. Debt can ruin lives, and the worst part about it is that it is completely preventable and usually comes from irresponsibility. A bankruptcy attorney in Philadelphia said:
‘Debt is often very avoidable, and learning how to avoid it at a young age is crucial. It’s important for parents to teach their teens about spending, credit, and how to keep themselves out of debt by making educated financial choices’.
Young people often get themselves into debt because of credit cards and irresponsible spending. By sitting down with your teen and explaining how credit cards and other ways of spending money work, you will hopefully be able to stop them from getting into debt when they reach adulthood.
Discuss Education and Future Plans
Having a plan for anything in life is important. However, it can often seem overwhelming, especially for young people who are figuring out what they want to do with their adult life. Taking the time to talk to your teen about college and his or her plans after high school can be extremely beneficial to his or her financial wellbeing.
Higher education is expensive, and often, parents cannot afford to pay for their child’s entire college tuition payment. Discussing student loans and payment plans with your teen is important when trying to help him or her pick a college that is right for them, which will also not put them in a massive amount of student debt.
Likewise, helping your teen choose a field of study will benefit their financial future and independence. Assisting your teen in a practical area of study will allow them to gain a comfortable sense of financial independence early on in their adult years.
College is not for everyone, and that’s okay. However, helping your teen discuss plans after high school is imperative to gaining financial independence. Suggest that your teen goes to a trade school or interns at a place that will allow for a bright and stable financial future.
It will also be beneficial to discuss living expenses with your teen as they get closer to financial independence. Most young people aren’t fully aware of how rent and mortgages work, so discussing these things with your teen will help them later on in life as they prepare to move out and gain full financial independence.
Lessons That Will Last a Lifetime
Tips and topics like these will help your teen as he or she becomes an adult and will prevent any financial hardships that so many young people fall prey to. Make it your goal for the year to talk to your teen about finance. Preparing your teen for financial independence now will also prepare them for future financial burdens.
Article by Veronica Bater
