Your child is going to learn a lot thanks to the schooling system, but one area that they definitely won’t learn about - but which they definitely should - is personal finance. This is one of the biggest factors of life, yet barely gets a mention within the classroom. That’s why you need to pick up the pieces and educate your teenager on the financial basics before they enter the big wide world and figure out just how much trouble it can cause.
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The Basics
There’s a lot of terms that are thrown around when it comes to money. If it’s confusing to an adult, you can bet your bottom dollar that it’s confusing to a teenager! Before they’re eighteen, make sure they’re clued up on debit and credit cards, debt, the right bank account for them, and so forth. It’ll help them bust through the mystery that can surround anything financial when they’re managing their own money.
Live Within Your Means
This is something that many adults have failed to do, and we’ve seen what kind of trouble that can cause. Make sure your children understand just how important it is that they live only within their means. If they have a job and figure out they can just about buy a fancy car on a monthly payment plan, they might be tempted to do it, But if you’ve already explained why doing something like that would be foolish, they’ll be able to use their money more wisely. On a day to day basis, they’ll benefit if you teach them how to make a simple budget for their incomings and outgoings.
Not All “Debt” Is Bad
Many people recoil when they hear the word ‘debt’, believing that it’s always a bad thing. It’s not. Spending on a credit card is a form of debt, but it’s a good kind of debt provided the balance is paid off each money. This is because there are benefits that come from using a credit card, such as cash back, vouchers, or air miles. Take a look at a site like GoBear.com with your child to see the kind of rewards that are available. You can also explain that using a credit card will allow them to build up good credit, which will be useful later on in life.
How To Save
Your child won’t instinctively think to save their money; they’ll want to use it to buy gadgets, games, clothes, and other material items. Knowing how to save money is one of the best financial lessons you can teach your child, especially as they’ll find it easy to save later in life if the habit is drilled in at a young age. Help them figure out how much of their income to keep, and also open a savings account in their name, too.
Learning Lessons
You can teach your child all the lessons, but they’ll inevitably end up making mistakes. This is part of learning how to handle money. Let them fail a little, but keep a watchful eye to make sure they're not getting into any serious financial trouble. You don't want your teenager to have to learn about debt settlement at such an early age.
