Do your teenagers know how to budget, or build credit? Do they understand the need for a savings account? Do you teenagers earn and spend their own money? Wisely?
How much do your teenagers really know about finances? Here are five phrases you have most likely said to your teenagers. These are topics your teens should have a basic knowledge about before they are living on their own attending college.
Eventually You Have to Pay Back that Credit Card Bill
Most teenagers don’t have access to credit cards, but once they turn 18, things change. According to Bankrate, two-thirds of college students surveyed had one or more credit cards. Of those with credit cards, 83% received their first card by the end of their freshman year. If your teenagers haven’t been properly taught how credit works, they can easily get into thousands of dollars of debt. Consumer adviser Clark Howard advises students to wait to apply for a credit card until they are a junior or senior, since when you are in college it is easier to be qualified for one.
Are You Sure You Can Afford That?
Looking at the money on paper is helpful for your teenager to see where the money goes. Set goals after budgeting and help your teenager understand saving for something bigger. Teaching your teenager how to budget will help them establish good money management skills early in life.
You Might Want to Save Some of That Money.
Every teenager needs to have a bank account. Of the students surveyed by Bankrate, one out of four students had no bank account. Do your teenagers understand what it means to bounce a check or what overdraft fees are? The best banks offer some type of accounts for children, as well as teenagers. These accounts can be joint accounts with parents and have lower overdraft fees attached to the account.
I Don’t Care if Everyone Else Has One!
The biggest lesson to teach your children is the difference between wants and needs. Hopefully, your teens are seeing you differentiate between wants and needs. Sit down with your children show how you spend money on needs before you take on the wants. By showing them your budget and helping them work through it they can learn how to focus on the needs before the wants in life.
Even the basic needs of food and shelter and transportation tend to be what we want instead of what we need to get by. Teach your children the difference and learn the difference yourself if necessary.
Yes, the Government Does Take Out That Much in Taxes
Most likely your teenagers have already been exposed to sales tax, but do they understand once they start earning money, taxes will be taken out? Taxes are a part of making money and owning a home or business. Take any opportunity to teach your children where their tax dollars go. For example, when you pass a school, or a fire station explain how taxes help make those buildings a reality. The sooner your teenagers understand where their hard earned money is going and how much they pay each paycheck in taxes, the better they will be able to budget their money to fit their needs.
Teach Your Teenagers Today
A survey conducted by the Program for International Student Assessment was given to 29,000 15 year old students from 18 different countries. Out of those students, American students fell below half of their teens in not just math skills, but in everyday financial skills. To prepare your teenagers for life ahead of them, take the time to help them understand the basics of finances and teach by example. Having financially knowledgeable children will create financially stable adults.