Conversations You Need to Have with Your Teenager About Money

Every parent wants their child to grow up happy and healthy. As your child grows into a teen, you realize there are many skills they’ll need to develop and implement on their own to take care of themselves. Money is one of them. Did your own parents sit you down and talk about money? Most people are told at some point that it’s important to get a good job and save, but they’re never told how to do it. Practicality is key, especially with teens. If they don’t see the immediate purpose of something, they consider it irrelevant. Here are a few conversations you’ll want to have to help your teen learn money management skills.

How to Use a Credit Card Wisely

Your teen may already have a credit card or use yours. Or they could be excited to get their own as soon as they graduate and enter their early 20s. Credit cards are valuable, but they can also lead to disastrous financial habits that leave young adults in crippling debt. Show your teen how to use credit cards to pay bills, and how to line up their spending with their budget so they can always repay on time. You can practice this by demonstrating how credit cards are used, how to pay your bill online and how to read a credit report.

How to Be Happy with Less

Materialism teaches kids and teens that happiness and self-worth are rooted in what they can buy. Social media reinforces this message through influencers, young adults living flashy lifestyles that teens admire and strive to emulate. Talk to your teenager about the importance of being happy with what they have and what they can afford, no matter how much they eventually earn. Less is more, especially when it comes to choosing something practical over extravagant and expensive. The bottom line is that just because someone has something nicer or more costly than you, it doesn’t mean they have a better life.

Values come into play here, and you’ll be able to pass on your own to your child. Listen to them, too. Teenagers have identities of their own, and they’re preparing to enter a period where they’ll start forming their own beliefs, values and morality. This conversation can be a good way to promote acceptance of new information and the importance of consideration.

How Loans Work

Your teen will likely first encounter loans when they take them out to pay for college. Although schools provide loan counseling, most students don’t absorb the information and flounder as adults. College loans produce significant debt, even for those who attend an affordable school. Talk about the different types of student loans, and the fundamentals of how they work, including interest, consolidation and the repayment process. If your teen eventually goes to grad school, they may need to take out private student loans to cover the cost of tuition. Planning for their future includes factoring in the cost of educational goals and career ambitions into their budget.

How to Budget

Budgeting is something many adults struggle with and teens are at an advantage because they have lower incomes and less expenses. This is an ongoing talk that should be practiced as well. Give your teen some responsibility by having them pay for their own phone bill, car insurance and other necessities. If they work part-time, they can learn how to set aside several hundred dollars a month and spend more wisely. Investing their leftover income into a savings account and divvying up funds for entertainment will help them be more financially responsible down the line. In college, you won’t be able to keep track of your child’s spending habits, and they shouldn’t rely on you as their primary source of income. Even if you are able to give them money to help them out, they won’t benefit from it if they don’t know how to spend it wisely.