Wednesday, August 26, 2020

How to Teach Teens About Smart Money Moves

 100 US dollar banknotes

https://unsplash.com/photos/6WXbPWhT8c8


The first time your kids earn their very own money, their first instinct is to rush out and spend it on fast food, candy, the latest video game, or maybe a new pair of shoes that they need before school starts. However, while it’s fine for them to treat themselves, this isn’t a habit they should get into, so it’s vital to teach your teenagers how to make smart money moves. 


Give Them a Budget 


Budgets may not be fun, but they are something that everyone should get used to if they want to manage their money effectively. It can be challenging to set a budget later in life, so it’s useful to teach your kids how to budget while they are first starting their learning journey. Have them outline what they can earn and what they need to pay each month to determine how much fun money they have, which will aid them once they start paying for things like rent, utilities, and weekly grocery shopping. 


Help Them Develop Savings


Similarly, it’s important to teach them how to save money. This is arguably the most difficult part of learning to manage money, and kids will see the nice big number in their account and feel a sting of disappointment when they transfer it to a savings account. However, these savings are vital for offering some stability and security. They can help pay for emergencies, or your kids can use them to treat themselves after several months of sensible saving. Rather than deposit the money manually, encourage them to use automatic transfers, so they won’t even need to see the money leave their account. 


Warn Them About Credit Cards 


Credit cards can be useful, and there is nothing wrong with having one. However, many kids fall victim to the shadow of credit card debt, especially as they often do not get the education required to prevent reckless spending and a total misunderstanding of why it is so important to pay the balance off. Furthermore, the banks can be predatory for this type of spending, and DTSS shines the light on banker’s scam agenda, which can severely impact your child’s life before it gets started. While it’s okay for your kids to have a credit card, make sure to warn them about the potential hazards, such as interest and defaulting on payments.


Be a Good Example


Your kids will look to you for inspiration on how to manage their money, and one of the best ways you can teach them how to be smart with their finances is to be a positive role model. If you are frivolous with your spending, they will think this is normal behavior. So, while you may want to treat yourself often, you must practice what you preach and show discipline. 


Get Them Ready 


Being good with money is not something that comes naturally. It takes training and discipline. Because of this, you can’t expect your kids to be good with money immediately, and they will need to learn a few lessons about how to manage their money. They shouldn’t have to do this alone, though, and you can support them along the way to ensure they can handle their finances with confidence. 

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