Last updated on October 5th, 2023 at 01:11 pm
Have you had “the talk” with your teens yet? Not the one about the birds and bees — although that one is important too. No, we mean talking to teens about money and how it works.
Money management isn’t a class they can fit in between AP English and biology. Financial advice is usually missing in their high school schedule, so most of what they learn comes from you. It’s crucial you teach them the right things.
Sooner or later, your not-so-little-one will be spreading their wings and leaving the nest. Make sure they’re ready for their first taste of freedom with these tips for talking to teens about money.
4 Tips for Talking to Teens About Money
Get Them to Budget
Whether they have a part-time job or simply do chores for an allowance, they’re earning money. Add in birthday presents, holidays, and other bonuses, and they may have some cash set aside.
Seeing as it’s their cash, they can do what they want with it, but it’s a good idea to show them how a budget works. Talk to them about the importance of balancing a budget — not just to make sure they aren’t spending more than they earn, but to ensure they’re hitting all the budget must-haves.
Short- and long-term savings are a part of a balanced budget, so discuss their goals. Do they want to buy a car, save up for college, or go on a school trip? A budget can help make these things happen.
Talk about Credit
Anyone who’s gone through school, bought a house, or experienced an emergency while short on funds understands that savings won’t always be there to help. Sometimes, you have to borrow money in order to afford life’s biggest purchases (like a home) or to handle life’s biggest curveballs (like an unexpected car repair).
You know this, but your child may not. They’ll need to know the basics of borrowing money sooner or later, especially if they intend to go to college.
Sit down with them and discuss the reasons why someone might borrow money, and how interest and other rates applies to personal loans.
While student loans may be their focus, don’t be afraid to include other personal loans in your conversation. Discuss both the downsides and the benefits of installment loans, and help them understand when it makes sense to borrow money and when it doesn’t.
Involve Them at Tax Time
Tax time is the perfect opportunity to discuss money with your teen. Include your child when you sit down to file, and walk them through what you’re doing.
Even if they don’t have a job yet, they will soon. Teaching them the basics about W-2, W-4s, and 1040s will give them a better understanding of what they’ll have to do in the future.
Not everyone loves talking to teens about money, but it’s an important lesson kids need to learn. Once you have that talk (and hopefully more than one), they’ll be better prepared for the realities of being an adult. Even if that’s several years away, get comfortable talking about it today.
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