Teenagers tend to think they already know everything, they make wise financial decisions, and often feel that their parents have no idea what really matters to them. Such erroneous beliefs are not true, since parents are aware of the dangers of poor financial decisions. Parents can and should teach their teens a lot about money and how to use it well.
Parents have experience on their side. They have dealt with the money and the ups and downs that come with it. Parents can provide teens with information on how to make money and manage money. From day one, they can put teens on the right track to understand the benefits that money and good credit can bring to their lives. Here are some tips for your teens to make wise financial decisions.
Open a savings account.
As soon as a teenager starts earning income from any kind of job, take him to a bank to start depositing his money in a savings account. Encouraging teens to leave all of their money in the bank for a month before using it will help them save moderately large amounts of money that would otherwise go to waste in no time and not at all of importance. While it won’t be easy to get teens to stick to that plan, it will be a great financial lesson for them.
Open a certificate of deposit.
After a teenager has successfully saved about $ 500, ask them to invest this money in a CD. Interest rates will be higher on CDs the longer they are held. Trying this out on a yearlong CD is a good idea so that when the CD is opened your teen can think about what they should do with the accumulated money.
Don’t make hasty decisions.
Request that teens not make sudden purchases of things they think they really want before sleeping on it for at least one night. Making hasty decisions often brings buyer’s remorse, something most parents are familiar with. By applying this “No Sudden Purchases” rule, teens will save themselves from experiencing such remorse. For example, you could explain to a teenager that instead of buying a scooter today, being a little patient and saving money could get him a motorcycle.
Plan your finances.
Budgeting can be as helpful to teens as it is to parents. Make them understand the difference between their needs and wants. Allow them to consider their situation and determine what they want. Over a period of time, allow teens to write down exactly what they consider their personal wants and needs.
Determine how much money and time it will take teens to meet their needs. They can also decide how much money they want to save monthly in an effort to buy something they want. In this way, they will have an extra expense of money to go out with friends or on dates.
Teens can learn to use money wisely, but starting to teach them as soon as possible will make it easier later. Financially responsible teens will become equally responsible adults, capable of meeting their financial needs efficiently.