If you have teenage children, you will be well aware that they are maturing and slowly getting closer to entering the real world, where money management is so important. It is essential that your teenager understands the value of money and how to manage it, to ensure their transition into adulthood is smooth and as debt-free as possible.
To help you enhance your child’s financial knowledge, you should take a look at the following tips, which will make sure that your teenager understands how to achieve financial independence, and manage their money successfully.
Set a good example
In order to educate your child on financial fundamentals, you need to practice what you preach, and make sure you’re not spending money that you don’t have. You should also try your best to stay on top of your bills, getting your child involved with this process where possible, to prepare them for their future.
If you decide to invest your savings, you should make sure that you choose a tangible asset like property, which will offer excellent returns and long-term financial benefits. To invest successfully, you should work with property experts like RW Invest, who can advise you and your teenager on the ins and outs of property investment. You could also get them involved by letting them research the property market, or allow them to help you renovate to ensure you get a significant amount of tenant interest.
Give them a sense of responsibility
If your child is thirteen or over, they should have some sort of understanding of the value of money and what it is used for. As your child gets older, they will want to spend the pocket money you give them on more expensive items and activities, and so they must learn how to prioritise and budget.
To ensure they understand budgeting, you should offer your child a specific amount that should be used for lunch money. If they opt to buy something other than food, then they will have to go without, as that is the way the real world works. This will allow them to learn a valuable lesson to do with money and priorities, as it will help them understand the difference between necessities and desires.
Have the credit talk
If you have already set up a bank account for your teenager, they will have some sort of understanding of card payments, however, they will be less aware of credit cards. If your child is the higher end of their teenage years, then they may have got a letter regarding a shiny black card. While right now is not the best age for them to have a credit card, you should definitely educate them on it to ensure they are prepared.
While credit cards can be seen as negative, you should inform your child that the more credit you use, the more likely your credit rating will improve. If you feel like your child is ready for a credit card, you should explain to them that they should aim to only use up to a maximum of 30% of their credit limit to achieve a good credit score. They should also get in the habit of paying off their full balance each month, in order to keep on top of their payment. This will offer reassurance to them as well as you, while also offering them financial independence without having to rely on you.