Sometimes, getting your teen to sit down and talk with you can seem like parenthood’s greatest struggles. They’d rather be spending time with their friends than listen to whatever you have to offer. Yet, no matter what they say to the contrary, your teen still needs some guidance, especially when it comes to money.
Use this article as a resource for when you’re ready to bridge the topic of good money management. It offers some ideas on how to establish health money habits that will last them their whole lives.
Have “the job” discussion
As a toddler, they always insisted on getting dressed by themselves. When they were a little older, they made sure to get their homework done before they watched TV without being asked. Now, as a teenager, it only makes sense your independent toddler has grown into a young adult who wants to swap their allowance for a paycheck.
They wouldn’t be alone. According to a Harris Poll, most children are ready for a job by the time they’re at least 15. Another study shows roughly 20 percent of high school students hold a part-time job.
A part-time job is a rite of passage that will help them take on more responsibility while learning how to work with others and answer to a boss who isn’t Mom or Dad. It also means they’ll line their pockets with spending money they can use with their friends, at the mall, or however they like.
Things may have changed a lot since you were a teen, but you can still help them find a job. Brainstorm with them places where they want to work. Roughly a third of working teens have a job in accommodation and food services, but they may also be able to earn cash by lifeguarding or babysitting.
Although they won’t have any experience, they’ll still need a resume. Check in with this guide on how to make a first-time resume for teens.
Instill the value of budgeting
Once they’re making their own money, they’ll realize how quickly an entire paycheck can disappear. After indulging in every impulse and buying concert tickets, clothes, and a new phone, they’ll be left with a big fat zero in their bank account.
Luckily, they’re still living under your roof — which means you’re meeting their essential needs regardless of how little money they have. You should discuss this with them, explaining how independent adults in a similar situation may not have parents who can or want to help cover these costs. Many of these adults rely on an alternative support system, like short term loans.
Installment loans are quick, convenient online options that help people cover unexpected expenses and emergencies. Although they have short terms, they come with longer terms than payday loans, giving borrowers more time to repay what they owe. To find out how else they differ from these loans, you can learn more with your teen as you discuss the need for a budget.
A budget helps them balance out the fun spending (like fancy coffees or video games) with responsible planning (like bills and savings) so they won’t need to take out a personal loan. Talk to them about the value of goal setting — having an objective can help them ignore minor splurges, so they can put money towards larger purchases, like a trip, their own car, or college.
Talk about their credit score
If your child is studying for the SATs, then they’ve probably got college on the brain. Soon enough, they’ll be leaving the nest for campus, but not before they’ve researched student loans and student credit cards to help them pay for freshman year.
As they navigate their financing options, it’s time to talk about credit scores. This three-digit number represents the creditworthiness of a borrower, letting financial organizations predict how likely they’ll repay their debts on time.
In addition to mainstream banks, landlords and even employers may look at this number to determine the risk they’ll take on by accepting an individual as a renter or employee.
This score is incredibly important for your child’s future; a good credit score opens the door to financial freedom, while a bad score limits how many options they’ll have at any given time.
Explain how their choices now can affect their finances later on, following them well after they graduate. If they commit to good credit practices, they’ll be able to grow a healthy score even as they take out large student loans. However, if they miss payments or take out payday loans they have no means to pay back, they’ll tank their score and limit their options in the future.
Make the time to talk about money
Although your child may think they know everything there is to know about money, they don’t. They’ll still need your guidance when it comes to cash management, so make a point to talk about it. Bring up the need for a budget and good credit, but encourage them to ask questions. The time you spend together will help them grow up into an adult who’s responsible with money.