Even though recent studies show that children can start learning about money from as early as age 3, it’s never too late to teach your child financial responsibility. If you have a teen or young adult, here are some ways you can teach them important financial lessons.
Lead by Example
In this article by Project Bold Life, parents are encouraged to be open with their children about money and realistically living within their means. While initial conversations about money may seem uncomfortable, it’s worthwhile to help your child understand money’s value and why it needs to be managed properly. Use practical examples such as sticking to a supermarket shopping list and keeping track of savings for a large purchase. You should also help your teen create their own budget. While they may not have much money, these lessons will still cement the habits of determining things such as income, expenses, and savings.
Encourage Them to Earn
As your child gets older, they may have more demands. While you can tell them to save their money, they may be discouraged by the small sum. Based on their age, capabilities, and time constraints, you can help them choose a money-earning activity. Well Kept Wallet lists a number of ways that a teenager can earn money. These options range from doing online surveys to pet sitting to finding a job as a grocery clerk. Your teen will have to be careful with afterschool jobs though as they come with specific pros and cons. Remind them that while having a job can bring in money and teach them valuable lessons in time management and work ethic, jobs will also take time away from studying and other enjoyable activities.
Discuss Their Banking Options
Regardless of the amount of money your teen has, opening a savings account can help teach them money management skills. There are several account options for young people, so you’ll need to help them choose the one that fits. As they become more responsible, and especially if they were able to secure a consistent means of making money, they might be ready for a debit card. These debit cards may be attached to their savings account, or they may be prepaid debit cards that they will need to add money to. This is an important step in establishing your child’s financial independence as they can’t spend money they don’t have. This article by the Simple Dollar goes even further to suggest reasons your teen may be ready for a checking account. This would definitely depend on what kind of financial habits they’ve developed and how responsible they’ve proven themselves to be.
Explore Car Insurance if They’re About to Drive
If your teen is about to start driving, then you should discuss auto insurance and why it’s a requirement. They may also need to adjust their budget to include the insurance premiums. Of course, when you look at how much your teen’s policy costs, you may decide to investigate adding them to your policy instead, as this is often the best way to get a better rate. Age and lack of experience will factor into the price, but most insurance companies assign higher premiums to males than females, and this is based on repeat statistics that point to male teens being more dangerous drivers. Shopping for auto insurance can be a great financial lesson for your teen, as they’ll learn about rate comparison and seeking out discounts. Plus, this might provide additional incentive for them to maintain good driving habits.
Any time is a good time to start teaching your child about managing money. If you’re stumped about how to start the conversation, think about what you wished someone had told you at their age and start with that!
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