Welcome to another addition to Raising Money Savvy Kids! By the time a child is a teenager they will have many ideas about money. Some of these ideas, hopefully, will be empowered and smart. Others, not so much. Teenagers seem naturally inclined to take risks in many areas of their life, including financially. Let’s take a look at some financial tips for teens and ideas to help your teenager manage their money more effectively, and responsibly.
1. Save money regularly, even if only a little.
Saving a little money from every paycheck (or weekly allowance if you’re still doing that) at this age may not seem to add up quickly, but if you can learn to do this right from the beginning you will create a valuable habit. Making a habit of saving money on a monthly basis will bring even more returns when your paycheck increases and your savings habit naturally continues.
2. Think twice before buying.
Sure, you may want that new sweater immediately after seeing it on the rack, but learn to delay your gratification. By choosing to leave the store without buying something after seeing it the first time, you will be able to decide if you want it enough to return and make the purchase later.
3. Learn to use a checking account.
This is an important part of growing up. Becoming familiar with a checking account now will help you learn how to keep an eye on your expenses and balance.
4. Establish a good credit record.
When you are of age, apply for at least one credit card. This will help you to establish credit, which will be useful down the road when taking even more steps into the world of adulthood, such as buying a home, and setting up utility accounts.
5. Avoid getting into debt.
Although a credit card is useful when used right, it can cause devastation when misused. Do not get into debt unless absolutely necessary. Don’t use your credit card to pay for fun that you cannot afford, or other unnecessary expenses. Though most credit cards aren’t available until a teen is 18, things like a debit card attached to a bank account or a co-owned credit card through PayPal can help teach important financial lessons.
6. Take care of debt as soon as possible.
If for any reason you have had to get into debt, pay it back as soon as possible. Debt has a cumulative effect, which means that borrowing even a small amount can cost you double what you originally spent if you leave it too long. Use any extra money to pay off your debt immediately.
7. Start thinking about the distant future.
Retirement may seem far away right now, but the years will slip by quickly and in no time, you will be wondering how it crept up so fast. Don’t delay saving for retirement until you are in your 30’s or 40’s. Start now, and the savings will have time to accumulate into more than you can imagine.
8. Keep track of money spent.
Record all money earned and spent by you. Figure out your buying patterns, and adjust spending habits when possible, to make better use of your money.
9. Don’t shop for fun.
Gone are the days of going to the mall to hang out with friends and goof around. Going shopping without a purpose generally leads to unnecessary spending, and should be avoided.
10. Find ways to cut costs.
There are always ways to do this. Car-pool if possible to save on gas and parking, and get a membership at a cheaper gym than you normally go to. Little savings add up.
Finances are best learned now, while you are still young. Setting good habits will lead to a lifetime of financial wellness. Follow these tips now to ensure your future financial success tomorrow. Teens will make money mistakes. As a parent you can help them become more independent with their finances. Don’t bail them out; instead give them the opportunity to learn, grow, and become smarter about money.