Finances and Budgeting Advice For Teens
Finances and budgeting are hardly ever taught in today’s educational system. Even though our children learn advanced algebra and the history of economics, they rarely get the practice they need learn how to do a spending budget, stick to it, and start saving money once they land their first job. Add to this the practice of credit card providers in targeting 18-year-olds along with other college-bound youth, and the outcome is a potentially dangerous combination of irresponsibility and mounting debt. This implies that it’s the job of parents – and the finance industry – to make teenagers responsible for the money.
And while it may seem difficult to teach fiscal liability to a generation known for acting first and thinking later, responsible investment management is among the most crucial lessons you’ll ever teach your kids. The most crucial thing teenagers – and adults – need to find out about money is that it’s significant to set goals. Telling your teenager that she or he needs to take 10 percent out of every babysitting paycheck and place it in a savings account only teaches them that they need to listen to Mom or Dad. Urging them to save one thousand dollars to invest in mutual funds along with your very own investments allows them to view a goal and calculate what kind of returns they may expect later on down the road.
Seeing those numbers see Written on paper can go a considerable way in solidifying a teen’s understanding of finances. In the end, safely invested money looks much like free money after awhile, and once your teenager combines this kind of goal with the goal of a large purchase she or he wants to make – say, a down payment on an automobile – she or he may have double the incentive to save. Most teenagers should also learn the value of budgeting. In today’s society, the general urge for teenagers is to purchase first, and ask questions later – and Mom and Dad will look after the rest.
Whether a purchase is made on a credit card or at the expense of this month’s gas money, many teenagers are later bailed out by parents who do not want to see their children racking up poor credit scores. While protecting your kid from a life time of poor credit is admirable, you are frequently better off letting them learn from their mistakes. Have your teenager make a spending budget and stick to it. If she or he goes over, resist the urge to provide the funds they need to get by and force your teenager to skip out on movies or new garments till the spending budget is balanced. In the end, learning about not overspending now – before your children live on their very own and the real danger of debt becomes a threat – can in fact help teenagers in the long term.