Teenagers are at an important stage in life. They are no longer children, nor are they necessarily adults. The teen years are an important time to begin providing adult advice, and one of the most important subjects to discuss with these future adults is money. Financial literacy is sorely lacking in much of the population. Here are some areas of personal finance teens should learn about.
Open A Bank Account
You should help your teenager open a bank account. The process may be confusing if it is their first time seeing it, so offer to go to the bank with them. Most of the time their bank account will come with a checkbook and ATM card. Show them how to write out a check and balance their checkbook. Encourage them to pay for things. If you help provide money for items like clothes and toiletries, deposit the money into their bank account so they can experience making their own financial decisions.
Help Create a Simple Budget
Even if your teenager isn’t working, they can still learn how to budget their money. This way they can learn how to track their money without the high stakes that come with a paycheck. Talk to them about what percentages of money they can save and spend. You should also discuss expected versus actual expenses.
Another good way to introduce your teen to a budget is to show them yours or create a fictional situation.
Your teenager should also have a basic understanding of how taxes work. Show them a copy of a paycheck so they can see how federal and state taxes are taken out. You can also show them how some money goes into programs like Social Security.
Encourage Them To Work
Teens may have some money from gifts or an allowance, but you should also encourage them to find part-time work so they can start saving for future expenses. This will also give them more experience managing their own finances and deciding how much to spend versus save.
Money issues lead to stress in adults. They are a leading cause of health and marital problems. Teenagers who learn early can avoid some of the problems that come from having financial issues. This is why it’s important to take the time to educate them.