1. Teach them how to use a checking account and debit card
A checking account and a debit card are great starter tools for managing money. Your teen can use a checking account to track their spending and see where their money is going each month.
Here are a few things you'll need to do:
- Open up a checking account. This will give them a place to deposit money to cover their expenses. Many financial institutions have checking accounts made specifically for students and teens.
- Link a debit card to the account. This will allow your teen to make purchases or withdraw cash.
- If your child has a part-time job, help them set up a direct deposit into their checking account.
- Teach your teen how to use online banking and mobile apps. This will help them keep track of their spending and budget accordingly.
- Show your teen how to reconcile their checking account each month. This means ensuring that the account balance matches the financial institution’s records.
- Teach them the difference between an available balance and a balance in their checking account. Make sure your teen considers pending card payments from gas stations and other retailers that haven’t been processed yet when checking their balance.
2. Help them save
Saving money is a key part of financial success. Help your teen set up savings goals, both short-term (for example, concert tickets) and long-term (like retirement).
Here are a few things you can do to help them reach their savings goals:
- Encourage your teen to open up a savings account. This will help them keep their money separate from their checking account.
- Teach your child how to set up direct deposit or recurring transfer into their savings account. This will help them build up their savings automatically.
- Show your teen how to track their progress towards their savings goals. This will help them stay motivated to save.
3. Teach them the importance of credit scores
A good credit score is important for pursuing financial dreams. Help your teen understand what a credit score is and how it's used.
Here are a few things you can do:
- Explain what a credit score is and how it's used. This will help your teen understand its importance.
- Teach your teen how to check their credit score. This will help them keep track of their progress.
- Show your teen how to improve their credit score. This will help them make responsible decisions about borrowing and repayment.
- Encourage your teen to use credit responsibly. This will help them build a strong foundation for financial success.
4. Help them learn to compare and shop for the best deals
Comparing prices and shopping around for the best deals is a great way to save money. Help your teen understand how to do this.
Here are a few things you can do:
- Teach your child how to compare prices online. This will help them find the best deals on products and services.
- Show them how to use coupons and discounts. This will help your teen save even more money on their purchases.
- Encourage your teen to shop around before making a major purchase like a car or insurance. This will help them get the best value for their money.
- Help your child realize they can shop around for different prices and quotes for contractors and services for their future home. Don't settle on the first offer.
5. Teach them how to pay bills
Paying bills on time is important for maintaining a good credit score. Help your teen understand how to do this.
Here are a few things you can do:
- Teach your teen how to create a budget. This will help them track their expenses and ensure that they have enough money to cover their bills.
- Show your child how to set up automatic bill pay. This will help them automate their bill payments and avoid late fees.
- Encourage your teen to make all of their payments on time. This will help them build a strong credit history.
- Show your teen how to write a check for those vendors who don't have electronic payments.
6. Teach family budgeting
Budgeting is a key part of financial success. Help your teen understand how to create and stick to a budget.
Here are a few things you can do:
- Teach your teen how to track their expenses. This will help them identify areas where they can save money.
- Show your teen how to create a budget. This will help them allocate their money wisely. Look for money management apps for them to use or have them create a budgeting system of their own.
- Encourage them to stick to their budget. This will help your teen make responsible financial decisions and spend money wisely.
7. Teach them that financial freedom is closely linked to their level of debt
Debt can be a major financial burden. Help your teen understand how to use credit wisely.
Here are a few things you can do:
- Teach your teen about the different types of debt. This will help them understand which debts are more manageable than others.
- Encourage them to live within their means. This will help your child resist the temptation to use credit cards or take out loans they can't afford.
- Help your teen understand that debt is not always a bad thing. Some forms of debt, like student loans, can actually help them achieve their financial goals.
- Encourage responsible borrowing and repayment habits from the beginning.
- Teach them that the level of debt they have can limit the kinds of choices they can make in the future. Financial independence is important to your child’s future success.
8. Set a good example
Last, but certainly not least, be their role model. Your teen is watching you and learning from your example. Make sure you're setting a good one.
Here are a few things you can do:
- Be honest about your own financial situation. This will help them understand that it's okay to talk about money.
- Make wise financial decisions. This will show your teen that you're serious about making smart choices with your money.
- Talk openly about your financial goals. This will help your child understand the importance of planning for their future.
- Encourage them to ask questions about finances. This will help your teen feel comfortable talking about money with you.
Conclusion
Teaching your teen money management skills is important for their future success. Use these tips to help them learn how to budget, save, and make wise financial decisions. Remember to set a good example for them to follow. With your help, they can develop strong money management skills that will last a lifetime.
