Saturday, July 29, 2017

How You Can Financially Prepare Your Teen For Life

financial preparation
Do you remember what it was like to be a teenager and have the whole world laid out at your feet? The excitement of heading off to college and being independent from the parents is something you have longed to experience and when you do, it’s everything you hoped and more. Except for the financial independence. If you have been lucky, you had parents who taught you everything you needed to know about balancing a check book, paying bills and managing your car. If not, well, the real world will have been a huge shock!

Now, you are the parent and financially preparing your teenager for life beyond your house is so vital. Kids grow up quickly these days, and there’s no excuse for ignorance when there is information at the tip of your fingers at all times. You want to be able to foster financial independence in your teenager so that when they do fly off to college, they can feel secure without you to hold the purse strings for them. Of course, there will be times they will need your help. Falling back to you for help getting the right rental insurance or car insurance for teens is going to happen. No matter how old your teenager is, they will look to you for wisdom on these matters and getting them ready for independence doesn’t mean you won’t be there. Financial independence is a very different thing, and it will take some time, but if you want to get your teenager ready for that independence, then you need to follow these six tips to get them there:

Get A Job. As early as possible, you should be encouraging your teenager to get themselves a part time job around their studies. It doesn’t have to be much, but it should be enough to give them a little experience and a great work ethic. If your teenager has to work to get any type of money, then they will learn very quickly the value of the dollar and how to manage their pay to get the things that they want.

Housekeeping. If they are still living in your home, be the bank. Let them manage their money, but take a percentage of it for housekeeping. You can choose to use this for utilities, or do what most parents do and put it into a savings account for them for later on. Having them pay toward their cell phone bill or grocery bill teaches them that nothing in life is coming free. Once they move out, they’ll have to pay much bigger utilities and costs than they do being at home, so teaching them young will condition them earlier.

Credit. While we wouldn’t advise you to turn your teenager to the nearest loan options, credit is a part of life and should be learned about to be respected. This is where you keep the financial reigns on, but encourage slight independence. A credit account with their favourite store is one of the best ways you can help them to learn how to manage. Enforce the fact they will need to pay their balance in full at the end of each month, and you can teach them that credit isn’t to be abused.

Banking. If they get a job, they need a bank account and you should go with them to open one. This teaches your teenager to manage more than the numbers they see on a screen and gives them some independence away from you having to hand them their wages.

Budget. It’s so tempting to blow a whole wage packet in one go – even mature adults have trouble refraining from this one. Teaching your teenager to budget for all their expenses: car insurance, repairs and even their housekeeping, can teach them how to separate a disposable income from their spendable income. Management of the budget is going to help them go a long way when they do finally move out.

Goals. Everyone, no matter how old they are, needs a financial goal. It could be saving for a car or a pair of jeans, but helping them to set goals will encourage them to manage their money properly.

Teenagers are smarter than most adults give them credit for. It’s important that they understand that once they are financially independent from you that doesn’t mean you won’t support them when things go wrong, but it does mean they have to learn how to manage without you.

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