Tips to Instill Teens' Money Skills
from an article by Alex Veiga, Reno Gazette-Journal
Parents can have the biggest influence on a child's ability to handle finances as an adult. That's why it's important to start teaching your kids early what it means to be financially literate. Concepts like balancing a checkbook, making a budget, using credit wisely or saving for retirement are skills we all use in everyday life. Here are some helpful tips that your children can use now, during college and beyond:
Cover the Basics Early:
When a child is between the ages of 5 and 10 it’s a good time to establish an allowance for doing such things as chores around the house. It’s also an ideal time to set them up with a child savings account.
Give Teens Some Financial Responsibilities:
Hold your child accountable for their monthly spending habits; for example, have them pay for or contribute to their mobile phone bill or online video game account.
Consider a Teen Retirement Account:
It seems like a long way off but teaching your child early to save for retirement is a good habit to have that will help them in the long run.
Manage Early Credit Use:
Misuse of credit can get anyone into trouble, young people especially. By learning how to manage credit early you can help your child avoid the pitfalls of bad credit. Prepaid credit cards have boundaries and will not allow an over extension of credit. Or, consider adding your child to your own account and give them a card in case of emergency. It can also help you keep tabs on your child’s spending habits.
Make Car Buying a Lesson:
Instead of handing your teen the keys to a new car involve them in the purchase of the vehicle. Have them research and compare things like models, features, projected maintenance, and price. And don’t forget about insurance! Involving them in this type of research can help set their expectations.
Get Teens Involved in Household Finances:
Give your teens an up close look at household expenses. Take the time to sit down with your teen and walk them through your monthly bills. This will give them a real idea on how much it costs to keep the electricity on, the house warm, funding retirement and paying off debt.
These tips and your guidance will give teens a good foundation for sound financial management.