Managing your finances right now may seem pretty easy and straightforward, but for a teenager who is just learning about money management, it’s likely to be a confusing world. So, when you talk to your teen about finances, don’t assume they already know how things work. Take time to explain credit cards, loans, how to write a check, interest rates, etc. Explain those things you understand and take for granted, and make sure your teen knows that asking you questions about those things isn’t stupid.
Make sure you teach your teen how to budget. There are tons of different ways to budget (and tons of different apps and programs you can use), so make sure you teen understands what budgeting is, and then let them decide how to do it. Explain the importance of spending less than you make and what are the important things they should pay for first.
It’s always good to sit down with your teen and have an honest and frank discussion with them about what they’re currently spending their money on. While they probably aren’t making big bucks at their high school job, teaching them how to manage small finances will help them manage bigger ones in the future. So, ask them what they spend their money on—toys, entertainment, savings, presents, what? If you feel like they could use some guidance, then offer it. But always let them know what they’re doing well, too.
If your teen isn’t in the habit of putting aside some of their income for savings, then this is a vital conversation to have. Everyone should be putting some money away (some experts say at least 10%), and that habit starts when you’re young. It’s best to teach your teen the importance of saving and then let them decide how best to go about it.
Along with how to save, you should also talk about what to save for. Every teen is different: some want to go to college after high school, others want to travel, and even some want to go straight into a job. If your teen has expensive plans ahead (like college), then make sure they’re putting enough money off to the side to pay for that in the future.
