Your child is going to learn a lot thanks to the schooling system, but one area that they definitely won’t learn about - but which they definitely should - is personal finance. This is one of the biggest factors of life, yet barely gets a mention within the classroom. That’s why you need to pick up the pieces and educate your teenager on the financial basics before they enter the big wide world and figure out just how much trouble it can cause.
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The Basics
There’s a lot of terms that are thrown around when it comes to money. If it’s confusing to an adult, you can bet your bottom dollar that it’s confusing to a teenager! Before they’re eighteen, make sure they’re clued up on debit and credit cards, debt, the right bank account for them, and so forth. It’ll help them bust through the mystery that can surround anything financial when they’re managing their own money.
Live Within Your Means
This is something that many adults have failed to do, and we’ve seen what kind of trouble that can cause. Make sure your children understand just how important it is that they live only within their means. If they have a job and figure out they can just about buy a fancy car on a monthly payment plan, they might be tempted to do it, But if you’ve already explained why doing something like that would be foolish, they’ll be able to use their money more wisely. On a day to day basis, they’ll benefit if you teach them how to make a simple budget for their incomings and outgoings.
Not All “Debt” Is Bad
Many people recoil when they hear the word ‘debt’, believing that it’s always a bad thing. It’s not. Spending on a credit card is a form of debt, but it’s a good kind of debt provided the balance is paid off each money. This is because there are benefits that come from using a credit card, such as cash back, vouchers, or air miles. Take a look at a site like GoBear.com with your child to see the kind of rewards that are available. You can also explain that using a credit card will allow them to build up good credit, which will be useful later on in life.
How To Save
Your child won’t instinctively think to save their money; they’ll want to use it to buy gadgets, games, clothes, and other material items. Knowing how to save money is one of the best financial lessons you can teach your child, especially as they’ll find it easy to save later in life if the habit is drilled in at a young age. Help them figure out how much of their income to keep, and also open a savings account in their name, too.
Learning Lessons
You can teach your child all the lessons, but they’ll inevitably end up making mistakes. This is part of learning how to handle money. Let them fail a little, but keep a watchful eye to make sure they're not getting into any serious financial trouble. You don't want your teenager to have to learn about debt settlement at such an early age.
I have just graduated college and started a job recently. It's been so hard for me to balance my needs especially with the limited budget that I get from my salary. I hope they do teach this in school.
ReplyDeleteI remember when I first fleed the nest, I had no idea how to manage my money or what needed to be priorities but it's safe to say I learned the hard way. Very good advice, it's a long learning process and even 6 years later I still learn everyday
ReplyDeleteThese are all great tips for anyone learning how to manage their money. I really think finances should be taught at school, you leave knowing nothing about budgeting, tax or savings and they are so important. Like you say we all know the mess that has been caused by people not living within their means.
ReplyDeleteOne thing my father turned me on to when I was a young person was starting to save and invest. I'm so glad I listened to him. I made some financial mistakes along the way, but it was such a gift he gave me back then. Great advice you share!!
ReplyDeleteThere are some great guides I am even finding useful for myself! Totally agree that a lot of people see dept as bad thing but it not always is!
ReplyDeletexoxo,
Gabi
A great post for those with young children. Better start them early to make them aware and responsible.
ReplyDeleteThis is such a great post for parents with young kids, it's always great to get them to understand the concept of personal finance through their learning years.
ReplyDeleteThis is so true, I'm just about to enter my 20's and even though my parents did an awesome job - there's still some things I wish I had paid more attention to!
ReplyDeleteThis is such a great tips. It's important to teach our siblings to save money and how they badget their money. And help them to understand the concept of money.
ReplyDelete