4 Ways To Prepare Teens For Good Personal Finance Habits

Teens do not know the many advantages they have when it comes to credit, debt, income and personal finance in general. Because they’re a clean slate, they obviously have not had a chance to ruin their finances. But one thing is clear - if teens do not receive financial education early enough or manage their finances properly, they too can lose the personal finance battle.

This is why it’s important that teens get educated financially, whether at home by parents or at school by a teacher. The sooner the better. But what do you teach them? And what are some good ideas to try to get them interested in the topic? Below we answer this question and provide some good tips for you to try.

1. Tell Them About Credit -

One of the most important things any parent or caregiver can do is to make teens aware of credit. Everything from how it works, to why its needed, when its usually used, why and what lenders look for. This information is crucial to get your teen to understand that credit is a very important of life and should be treated as such. Once a credit record is tainted, it can be hard to recover and or takes a long time to recover. This is where an ounce of prevention is worth its weight in gold.

2. Show Them A Checkbook -

Your teen might have seen you pull out your checkbook numerous times over the years, while at a grocery shop and not once question its existence. The checkbook is something that should be discussed and is a great way to educate your child on the who, why, where and what about banking accounts. Even though checks are not used as often as debit cards nowadays, they are still used. But most important is the bank account behind the checkbook and the credits and debits that take place there. Take the time to teach them what this is all about.
3. Have Them Do the Weekly Grocery Shopping -
One exercise that all teens (in the 17 and up age group) should be exposed to is the weekly grocery shopping trip. If they grow up thinking that the food in the fridge, cupboards and cabinets is just magically placed there, they will have a hard time when they first leave the home and realize this is quite costly and an ongoing life expense. So a good way to teach older kids in the home about this necessary expense, is to take them shopping with you and have them do the shopping, pick the items out, pay at the end and so on. This way they will know what items cost, and how much they will need to pay for it all. In fact, have them do it by themselves a few times a month, so they have to rely only on themselves to do it.

4. Get Real and Talk About Finance -
Many parents think that if they start talking about personal finance with their kids, the kid will become scared of money and grow up financially irresponsible. But this couldn’t be farther from the truth. Knowledge is power and if taught properly, can and will only help them. So discuss money often and have them partake in minor financial tasks so they learn on their own and also so they appreciate the value of a dollar.

Summary:
Money is not and should not be treated as a dirty word in your home. Talk openly about credit, debt, income and savings - so that your teen child will learn the many different facets of personal finance. The more informed and comfortable with the topic he or she is, the better their chances of practicing smart finance habits in the future.

Missy Diaz is a personal finance professional based in Chicago, where she writes about universal life insurance rates among other finance topics.