Are your teens saving money? It’s never too early to start modeling and discussing good financial habits. By openly communicating about best practices, you can help your teens thrive! These are a few important topics to cover with your children:
Spend Less Than You Make
The golden rule of personal finance is to spend less than you make. You can help your teenagers build awareness of their spending by encouraging them to write down what they purchase. They can also monitor their transactions through computer applications like Mint. Their income is not entirely their own — they will have to pay taxes, and if their employer supports their insurance and 401k, your teen may need to contribute out of their paychecks.
Create an Emergency Fund
Most experts recommend saving between three and six months of income in case of an emergency. If your teens are starting to move toward independence, they would benefit from contributing to a “buffer” or savings account. Work with your teen to figure out the best percentage of their income to set aside into a bank account every week. Show them that saving money can be just as, or even more rewarding, than spending money!
Work Toward Meaningful Goals
Do your teens want to buy a new car or invest in their own education? Help them set and meet meaningful financial goals. You can empower them to come up with a budget that works towards their dreams. Even showing them how to take a small percentage of their income to practice investing in stocks and bonds. It’s never too early to learn about different investments.
Build Solid Credit
Any solid financial education will include a discussion about the importance of solid credit. Starting with a credit card, slowly build a foundation of credit--as long as you instill healthy boundaries. Make sure to go over these guidelines with your teens:
A college degree, a car, nice meals and a safe home are all dependent on the ability to manage money; planning ahead allows them to enjoy the abundance of life. Teens saving money can afford fun things like nice clothes and movies with friends! When you talk about financial habits, keep it positive and help them to meet their own goals.
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