The Piggy Bank: Prep your Teen
I’ve always had a soft spot in my heart for teenagers; what a tricky time of life! They want to be independent but typically don’t possess the knowledge or resources to make the best decisions. Then on top of it they are changing so quickly and so are all their peers… it all just sounds so confusing and anxiety riddled! Luckily, this blog does not require me to dive into the emotions of a teen. Today, let’s just look at ways we can help them with the financial aspects of their transition into adulthood.
First things first, encouraging teens to get jobs will help them establish the financial skills needed in the future and their employment lessens the burden of spending money provisions on the parents. With the start of the first job, should come the opening of a checking account. This provides a chance for them to learn the basics of accounting; credits v. debits and having to balance their account. In sitting down with your teen to balance their check book, go over how to write a check and how to use a check register. It would be a good idea to review the statement with them to make sure that all the charges are accounted for. As circumstances arise, such as when the numbers don’t add up or there’s a charge that they don’t recognize, help them walk through what to do.
Some teens have monthly bills but even for those who don’t, invite them to sit down with you as you pay the bills. As you do, discuss why maybe you are waiting until your next pay check to pay “that one bill”. It is also a great time to share with them the importance of paying bills on time to avoid late charges. Late charges are not the only ones our teens need to be aware of! Overdraft fees dominated my financial woes as a young person. It’s so easy to spend money when it doesn’t feel like money; it’s just a swipe of the card. A good recommendation for teens is to review charges at least once a week to make sure what they think is in their account, is in their account. But honestly, with mobile banking now-a-days, perhaps making it a part of their daily routine isn’t such a bad thing!
Debit cards and checking accounts are only a small part of the conversation! Credit card companies used to target young people and hand out applications left and right. I’m not sure if this has changed but advising your teen to understand the way credit cards work and how the charges can add up quickly, may help them avoid the trap of mountainous credit card debt.
While mistakes, financial and otherwise, will be made; the best we can do is try to arm them with the knowledge of how to avoid them in the first place and then be there to help them figure out how to fix it! Good luck to all those with teens in their lives!
If you are looking for more information on how credit works, check out our Understanding Credit Guide. It’s available for free download here: http://info.smcapproved.com/credit-guide
Information Source for this Blog: http://www.hrblockdollarsandsense.com/ideas-info-for/everyone/preparing-teens-for-financial-pressure/