Now more than ever, we should be teaching our teenagers the proper way to handle their finances. As they mature, you should teach them healthy financial habits to have a stable future in college or while working. Keep reading to discover a few financial practices to instill in your teenager.
Need It vs. Want It
You remember what it was like to be a teenager. You needed that new pair of jeans or that top because it was the trendiest thing in fashion. You realized as you got older that you didn’t need it; you wanted it, and you had to decide to get it or not.
Teach your teen the difference between a need and a want. Have them write down a list of their expenses and categorize them as a need or a want.
Develop a Savings Plan
Create a short-term and long-term savings plan with your teen. This savings plan will give them a goal to save for and help them develop healthy financial habits down the road. These saving plans could include saving for a shopping spree (short-term) or saving for college (long-term)
You should also encourage your older children to begin saving for retirement early by opening a SIMPLE IRA retirement account.
Always Have “Rainy Day” Money
Life is full of surprises and curveballs. Teaching your teenager how to prepare and budget for unexpected events is one of the best financial habits to instill in your teen. Be sure to define what is a “rainy day” and recommend a monthly amount to contribute to the fund every month.
How To Manage Money Correctly
These days, your teen is always on their phone. Encourage your teenager to download their banking app to help keep up with their finances. You could even encourage them to download a savings app to help manage their money.
Viewing their recent transactions and knowing the amount of money they have in their account should help them develop better spending and saving habits.