From the latest gaming system to the high-priced fashion clothing, your teenager wants it all! The teenage years somehow convince your teen that these items are “necessities”, regardless of other opinions. It’s also fair to say that the teenage years will bring lots of ‘firsts’ for your teenager. Many teens get their first job, make their first big purchase, and get a first glimpse of financial responsibility. It’s crucial that within these years, your teen gains insight to real-world financial obstacles, and learns how to manage them.
Earlier in this series, Speedy Cash shared ways to start teaching your child how to save money. It’s just as important to help your teen understand budgeting, tracking spending and saving, and start saving money for long-term goals. Speedy Cash has a few tips to help your teen accomplish these milestones.
Set-Up A Savings Account: A great tool to help your teenager understand the value of savings is a savings account. A savings account will provide a safe home for your teen to store his hard-earned money and will allow him to watch his savings grow. Working with a bank will also give him a sense of maturity while he learns about the significance of savings. Talk to your teenager and explain what long-term goals his savings account can help him achieve, such as a college degree. In turn, listen to what long-term goals your teen has for his money.
Help Your Teen Understand Credit: Bad credit is a phantom that can stick with you and destroy the hope of getting loans. To avoid bad credit, explain to your teen the difference between good and bad credit. Explain the difference between a credit card and debit card, and how each one should be used. If your teen understands credit and how it works, he’ll have more respect for credit. This respect for credit could create a path for proper credit management, which will be beneficial in the future.
Don’t Jump the Gun: Although it’s important for your teen to understand money management and credit, be cautious when giving your teen full access to financial tools and bank accounts. The excitement and maturity your teenager will feel if allowed a debit or credit card could back-fire, causing a spending frenzy. There are resources available to start your teen out slow, giving him the opportunity to demonstrate responsibility with his own money. Options such as prepaid debit cards are a perfect way to approach this. Prepaid cards allow you or your teen to load the card with a limited amount of money and spending records allow you to keep track of the transactions.