Money matters. As our kids enter their teens, they will also be entering the work force and need to have all of the tools necessary to survive the green jungle. Here are the top five ways to teach teens about money and what to do with it.
1. Knowledge Is Power
There’s no better way to start your teen off on the right foot than to educate them about money early on. Kids are sponges and teens are no exception. So it’s important you teach your teenager the value of a dollar and how taxes, investments, and savings work. How to budget, and how to stick to it are also important things to teach. You’ve been through all this remember, they haven’t. Share your hard won experience with them. They’ll soak it up and will have a better grasp on things when they enter the work force.
2. Bank Account
Setting a teen up with a bank account is only the beginning. They also need to understand how important it is to keep money in it. Have them put a portion of their allowance or pay check in their account. Show them how to save for a necessary big ticket item and for college. They’ll also learn how the banking world works but they’ll need careful tutoring when it comes to credit.
3. Part Time Job
There’s no substitute for experience and encouraging your teen to join the work force is the only way for him or her to get that experience. They’ll gather firsthand knowledge of how to find and keep a job, pay taxes, and save while learning the responsibilities that go with the job. They are going to spend the next several decades working at one job or another. The sooner they learn this, the better off they will be.
4. Pay Their Way
If the teen is working while living at home, then you might have them help with the household expenses. Whether you need the contributions or not, have them chip in. They’ll learn how much it costs to keep a roof over their head and you can’t put a price on that. Also, if you don’t need their money, you can set up a bank account for them and dump the money in there to give them as a nest egg when they move out.
5. Let Them Pay The Piper
This is the toughest item on the list but, ultimately, can be the most rewarding. Even if your teen has taken everything you’ve told them about handling money to heart, they might still wind up in over their head at some point. The key here is to let them get themselves out of it. Don’t bail them out. Offer advice, encouragement and so on but let them learn the consequences of irresponsible spending. If you whip out your checkbook at the first sign of trouble, your teen will be convinced this safety net will always be there to catch them when they fall and they won’t learn to stand on their own financial feet.