7 Money-Saving Tips for Teens
Our friends at NerdWallet are back with some tips on how to get your teens interested in finances. A few easy steps could help avoid financial stress in their future and get them set for success!
Most teenagers probably won’t leap at the prospect of learning about personal finance on their own. That’s why it’s important to take the time to teach them smart money management. To get the conversation started, here are seven topics worth discussing to help your teen avoid costly financial missteps in the future.
Encourage your teen to get a job
Preaching about the value of a hard-earned dollar isn’t quite as effective as encouraging your child to get a job. By working for their money, teenagers are likely to begin thinking critically about how they spend it, which is a good habit to pick up at an early age. If your child is too young for a job, you could provide a weekly allowance for helping around the house.
Help your teen set a budget
Once your teen starts earning money, explain how to set a budget. Consider explaining the difference between essential and nonessential expenses, providing examples from your own life.
Set financial goals together
Since creating a budget isn’t the most exciting activity, introducing the idea of saving up for a fun purchase might reinvigorate your teen. Putting away money every month requires discipline and is a great skill to practice at an early age by regularly stashing away some cash for a new smartphone, for example. Crunch the numbers with your child to determine how much needs to be saved each month to hit the savings goal by a certain date.
Help your teen sign up for a checking and savings account
So money doesn’t have to be stashed under their mattress, sign your teenager up for a checking and savings account. Great Basin offers easy Youth Account options to help get them started. Although you’ll need to co-own the account if your child is under 18, your teen can have an active role in managing it. Just know that you’ll have to foot the bill if any fees, such as overdrafts, are incurred.
Encourage responsible credit card use
Although your child won’t be able to get a credit card before turning 21 or getting a steady income, anyone can be set up as an authorized user on your plastic at any age. Make sure to implement rules regarding when your teen can use the card, and make it abundantly clear that your credit score will take a hit if your card is maxed out. Great Basin also offers options such as small Youth Loans or Secured Loans options for first-timers to learn how credit works. We also have a great credit tips document to help you have the conversation with your youngsters. You might even learn something new yourself!
Take your teen shopping
It can be tempting to overspend on name-brand products. To help your teen fight those initial instincts, shop together and explore the wonders of coupons, sales and store brand items. This should underscore the notion that popular products don’t always have to be the go-to option, which can save your child a lot of money over the years.
Teach your teen about compound interest
When it comes to saving money, compound interest is a person’s best friend. Saving early can mean a world of difference. Teaching your child about the many benefits of compound interest should encourage saving and contribution to a 401(k) plan in a future full-time job.
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