(yep, this is me as a teen, with my credit carded, $90 hair extensions! gasp!)
Now, I am no stranger to my teenage years. I am only 21, so it wasn't too long ago. Let me tell you, half my friends (& their parents) still don't know how to be frugal and cheap and it is really hurting them in this economy.
Here are my 10 tips I wish my parents had taught me about money (& some they did).
- Building a budget- Sitting down with a teen and going over what a budget with them should be is very important. Not only does it teach budgeting skills, it also shows them where there money MUST go. I used to spend my whole pay check at the mall and had no money for gas or car insurance. Showing them top priorities teaches discipline in teens in reference to money.
- How to save- My parents taught me how to be frugal, but they didn't really teach me how much I should be saving or why it is important. Teaching a teenager that the more they save now will help them out in the long run is appealing. No, they may not have a ton of money now, but they still live with you and you can always back them up, in the real world, that's not always true. Also, out of every dollar you make, you should save 10%. So only if they make $100 a check, by putting $10 into a savings, their savings will grow quickly.
- Why saving and having money is important- Obviously they know that working gives you money, but to a teen this is all money they can spend that they don't have to ask you for anymore. Showing them that saving their money and having some for the future is important is key.
- Credit cards- Yikes. Teenager and credit card in the same sentence is a bit scary. My dad handed me a card over, and that was the end of it. Racking up $1200 took no time. Responsibly used however, could be a good way to build a teen's credit. Some things to remember are: teach them about paying it off every month, and that if you don't have cash to buy it, then don't put it on a credit card; a student card could be the best option because it must be paid off every month to avoid high interest rates; keep their card and give it to them- this may not be on the top of list for ways of teaching to be responsible with money, but by not letting them ruin their credit score and making them ask you first for it, will ultimately make them decide if it's necessary and helps them out in the long run. They can use it for gas, and pay it off at the end of the month to build credit.
- Don't baby them- Don't tell your teen they must get a job to pay for gas and insurance and then not make them pay it. Teach them that this is a part of life and by saving up, they can get what they want.
- Give them due dates- As an adult, you have due dates for bills. The same should be true for your teen. If they pay you for their insurance, give them a due date. If they do not pay on the date, charge them more for the past due bill. If they spend their gas money on concert tickets, then do not let them borrow your car or money for gas. If it happened in real life, then they'd have to call someone else for a ride or take the bus. Teach them why paying the things that need paid are important. Don't bail them out unless it's an emergency
- Teach them the value of a dollar- Most teens have no idea how much it really costs to live on their own or run a home. Show them your bills and teach them how valuable having money really is and the consequences of losing their money.
- Relate to them- I know some of these tips may seem "harsh" but also remember that kids don't think in the same ways as us. They live in the now, not the future. If they want to go out with friends and call off work, don't yell at them, remind them of what calling off work and missing money means and remind them what the consequences are of losing that money.
- Don't be a hypocrite- If you have financial struggles, don't say "do this and this" because you don't do it. If you are in a financial burden yourself, explain to your kids, "this is what you should do and how to get there, and this is where I went wrong." One thing I know for sure I learned was after I saw one of my dad's paychecks, and then all his bills. I quickly stopped asking for money, and started using my own a lot more often when I saw what he was dealing with.
- Show them hard work pays off- A lot of times, kids see that they have nice things and totally take them for granted. Show them how long it took you to pay off that expensive flat screen or how long you've been saving for their college fund. Pretty quick wake up call. It shows that saving and working hard really make a difference between Community College and Harvard. (Not to say that you don't work hard if all you can afford is CC, you know what I mean!)