5 Tips for Raising Money-Savvy Teens

Your kid just turned 18. They’ve had a part-time job for a couple of years now, so they are no strangers to money. However, now they are old enough to get their first credit card. The problem is that your kid soon begins to treat their new credit card as a secondary source of income.

You know what happens next.

Debt starts piling up.

Before they know what happened, they are overwhelmed by sky-high interest rates and fall behind on their monthly payments, which has a detrimental impact on their credit rating. Good luck to them on getting a loan, or edging out the competition when trying to buy their first house.

In a matter of months, your kid’s entire financial future is beginning to look quite grim.

And this is just the beginning.

Thankfully, this nightmare scenario can be easily avoided. All you have to do is emphasize your child’s financial education from an early age so that when they reach their adolescence, they are financially responsible.

But how exactly can you go about increasing your kid’s financial literacy? It’s not as difficult as you might imagine. Follow these five tips for raising money-savvy teens.

The first lesson you have to teach your kids is that money does not grow on trees. If you want your kids to be financially responsible by the time they turn into teenagers, you must teach them the value of money from an early age. Make sure they understand that money is earned through hard work.

Your kids will need to learn to prioritize financial obligations such as food, shelter and transportation over things that are simply desired such as travel, fashion, electronic gadgets, etc. The key is that they understand that it is ok to splurge every once in a while, as long as their financial obligations have already been met.

Teach kids to generate appropriate budgets, track their expenses, and evaluate their purchases. Teach them early on to compare products and analyze their cost/benefit ratio.

Saving money should never be looked at as a burden. Saving money must become a priority. This is difficult even for most adults to grasp, but it is, without a doubt, one of the most important lessons to teach teenagers. Even though teens think they have life figured out, no one can predict the future, and it is crucial that they learn to save enough for a rainy day.

Creativity promotes outside-the-box thinking. It will also help your teen make sounder decisions. And with the way life keeps getting more and more expensive as we grow older, it is imperative that your teens learn to approach financial problems with an open mind.