Given how critical decisions about money are to building a comfortable life, it’s surprising that our schools don’t teach children enough about handling day-to-day financial issues. As a parent, nonetheless, you can teach your teenager critical money-related lessons, preparing them for what awaits them when they head off to college.
Below, we’ve shortlisted the most important lessons for parents to teach their children regarding money.
#1 Understand how debt works
It’s important for a teenager to be able to comprehend what student debt and other types of debt will truly cost, both today and over the longer run. As a child, one remains carefree and shielded from the tougher reality of the financial world. Being educated on debt is the first step to living a financially responsible life that doesn’t encourage debt.
#2 Familiarize yourself with the benefits of saving
It’s important to teach your child to spare and save whenever they can, and turn this into a regular habit by reviewing spending and saving ambitions every month. On the off chance that your children don’t comprehend this intuitively, cultivate a habit of reading financial books in the household to help them attune themselves do the benefits of saving.
[Related: Building blocks: Create your child’s college fund]
#3 Follow a budget
During periods where the bank accounts are tighter than anticipated, your child needs to stick to a budget and evaluate spending patterns and see where changes can be made. As a parent, you need to mentally have them braced for this before they head off to college. It’s a good idea to teach them to be more mindful and to restrain their spending habits lest they end up spending more than they make when they become independent.
#4 Plan for the unforeseen
When at school, children have their environment and financial expenditure set up for their convenience. Before they go off to college, it is crucial to help them understand that the real world could throw unseen obstacles at them. From a financial standpoint, one must always be prepared with a back-up plan and an emergency fund to fall back on. As they groom their financial independence, this is something they must be wary of.
#5 Work hard to meet your goals
Some youngsters in this day and age struggle with an absence of inspiration and it’s our purpose as role models to enable them to comprehend the truth of buckling down, particularly when they have student debt. It is important to impress upon children the value of diligent work, and of maybe taking on a side job whenever they need to. The harsh reality is that a large number of them will end up acquiring debt sooner or later, and this lesson is essential to help them tackle it.
These are just a few things that you, as a parent, can do to help steer your teenage child in the right direction. However, when it comes to one’s finances and money-related tendencies, learning from personal experience can usually be the most effective way of grooming a person and equipping them with the right decision making abilities.