For most teenagers, spending money seems to come naturally. But that doesn't mean they know how to manage it. In fact, the JumpStart Coalition for Personal Financial Literacy recently found that only 10 percent of 12th-graders could satisfactorily answer questions about personal finance. Some couldn't balance a checkbook.
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Yet many high school students have, and regularly use, credit cards - with little or no understanding of how interest rates, skipped payments or continual high balances can impact a person's financial future. So whether you've already begun the process of instilling sound money management in your teen or you're searching for ways to begin, you may find the following tips helpful.
Lead by example. Take a look in the mirror. If, for instance, you budget effectively, invest wisely, pay down debt and donate to charity, most likely your children will learn by example. Financial responsibility is one area where a parent's actions definitely speak louder than words.
Talk about money management. As soon as your child begins to earn money, it is important that he or she thinks about how to manage the income. A budget may seem annoying and a little extreme - but a basic plan may set the tone for jumpstarting your teen's financial future while still leaving money left to buys the things that will help him or her enjoy today. Your teenager's desire for a new video game, phone, computer or car can work to your advantage.
At this stage, you can begin to have periodic family financial discussions. This doesn't necessarily mean that your teenager needs to know your total income or the amount of your home mortgage. But you can certainly begin to familiarize your teenager with the family budget, financial challenges you may be facing, some of the family's longer-term goals and priorities, and perhaps how he or she can help you make progress toward these goals.
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SOURCE: CBN News