Your teens probably think that they know everything, and likely tell you so on a daily basis. However, it’s probably safe to say that your kids don’t know everything about one vitally important topic: money management.
April is Financial Literacy Month, which promotes the education of financial topics for young people. Learning how to properly manage finances is an important skill that teens need in order to have a financially successful future. Here are some tips on how to teach your teen about money management.
Talk About Savings
While not the most thrilling topic, talking about a savings plan is crucial to money management. One key element to this conversation is to determine a savings goal, and then set aside a certain amount each month to reach that goal.
Not only will this be an opportunity for your teens to practice self-discipline in spending money, it will allow them to save for things they love. Some suggested savings goals would be: new clothing, a concert, a gaming system, or a special activity.
While the savings might be small now, by the time your kids are ready to leave the nest, they will have the skillset to create a solid savings plan.
Budgeting Deep Dive
Budgeting, including how to create a budget, are great tools for your teen to keep in their “toolbox” of life skills. As with savings, budgeting can help teens feel more in control over their own money.
One great way to approach the budgeting conversation is to view it as giving every dollar your teen earns a job or purpose, which will ultimately help them reach future goals. Another budgeting talking point is the difference between initial and ongoing expenses. For example, many teens want to save up to buy a car. And while there is a large initial expense, the ongoing expenses are also something that need to be considered and budgeted for properly.
Eventually, your teen may be interested in using a credit card or taking out a loan. However, before they take the leap, make sure to talk to your teens about debt management. Knowing how to responsibly manage debt will help teens make better decisions about their finances and their own future.
One important aspect to debt management is not taking on more than you can afford. It can be enticing to apply for credit cards at several favorite retailers, who will sometimes advertise a certain percentage of savings on purchases with the application of the credit card. However, your teens will quickly come to find that this plan will come with high interest rates and the temptation to over-spend.
Talk to your kids about responsibly managing a credit card and its benefits. Having a low-interest credit card will give your teens the freedom to make decisions (especially in emergency situations), and allow them to pay it down each month to build up their credit score.
We Prioritize Financial Education
We know how intimidating it can be to approach money management with your teens. However, with graduation season around the corner, there is no better time to make sure your teens are prepared for their future.At Blackhawk Bank, we make it priority to help educate clients about their finances, so they can make better decisions for their future. Are you ready to learn more about Blackhawk Bank? Contact us today!