Your teen has a natural curiosity about money, especially when they witness early on how it impacts their list of wants. The information and habits they are collecting today will influence their money management abilities and chances for financial success as an adult. There is no better time than now to foster their curiosity and share these most critical life lessons.
1. SPEND LESS THAN YOU EARN, SAVE THE DIFFERENCE
It seems like a simple concept, but not always easy to put into practice. Whether it be an allowance from family or wage from an employer, your teen will form good habits by following this golden rule to managing their money.
2. EXPENSE TRACKING
Budgeting can be an overwhelming task even for an experienced adult. Start your teen out with the simple challenge of tracking their expenses. This is the first step to understanding where their money goes and if it was spent wisely.
3. CASH, CREDIT OR DEBIT?
There are advantages and disadvantages to paying with cash, paying with a debit card, and paying with a credit card. Your teen will benefit from knowing the differences and when to choose one over the other.
4. MONEY IS NEVER FREE
Borrowed money comes with a price and sometimes that cost can be substantial. How interest and fees affect the use of money is information your teen needs to know from both the loan and saving perspective.
5. UNDERSTAND GROSS VS. NET PAY
Receiving that first paycheck can be a bit disappointing if no one has ever explained why ‘take home pay’ is less than expected. Understanding withholdings like taxes, benefits and other payroll deductions will help prepare your teen for this reality.
6. KNOW GOOD DEBT FROM BAD DEBT
Being in debt is not necessarily a bad thing, but the wrong kind of debt can be dangerous. Explaining the difference between secured and unsecured debt
can give your teen insight to proper debt management.
7. YOUR CREDIT SCORE DOES MATTER
Students are familiar with the A, B, C and D grading system, which makes a credit score scale easy to understand. Your teen may not have a credit score today, but they will benefit from knowing they have an influence over their financial grade.
