Teens and Money
Teaching Your Teenagers how to be Financially Responsible
Let’s face it, before you know it your teens are going to be out of the house with an entire lifetime to earn, save, invest and spend money ahead of them.
Here are some simple steps to set them up for financial success!
Encourage your teens to start generating some income as their school loads allow. Why is this important? Earning their own money is a perfect opportunity for them to open their own checking accounts.
Having their own checking accounts will help them understand that they have a finite amount of money they can tap into, very similar to how credit cards work. Make sure they get a no-frills checking account with low or no fees— like BCU’s Go Checking™ account.
Build Credit— Responsibly
When the time is right, have your teens open their first credit cards. A solid credit scores take time to build and everyone needs to start somewhere. Helping your teens establish solid credit histories early will go a long way towards establishing their financial independence. Make sure to look for a card with a low credit limit. While they’re still under your wing, show them how to use credit responsibly. Have your teens use their cards and get into the habit of paying off the balance in full every month.
Know Your Needs
Helping your teens understand the difference between needs and wants can go a long way in adulthood. Sit down with your teens and explain to them the difference between needs and wants and be clear about which of their needs you will cover – like basic shelter, food, clothing, etc. If there’s anything your teens want beyond those established needs, help them prioritize and figure out which of those “wants” they want most. Then they can map out a plan on how they’ll be able to make those purchases.
A good way show your teens the value of a dollar is to walk them through the household budget. Right now, they probably think the household income is limitless. Show them just how much car insurance is! Showing your teens the household expenses will make them think twice about their “wants.” Also, having your teens sit down with you to review household expenses will give them an idea of what to expect when they’re off on their own.
Remember, giving your teens a good understanding of how to manage their finances now can save you plenty of headaches in the future and help ensure their financial independence.