Summer is around the corner and with it graduations, summer vacations, and figuring out to what to do with the kids. But, summer can still be a great time for teaching even with the break from traditional school routines. Here are four great areas that you can use or share with family and friends who are in this season of life.
Teaching teens good money habits is essential but can be frustrating at times because, as you know, they already know everything there is to know. Since most will have part-time jobs and shopping experience, look for real-world teachable moments to fine-tune those concepts you’ve already taught them. Summer is a great time to introduce new activities to further enhance their money management skills.
Five Great Money Tips for Teens
Automate their savings. Show teens how to set up automatic transfers from their checking to their savings account to encourage a habit of setting aside a portion of their paychecks to ‘pay themselves first.
Emphasize the importance of good credit. Many big-ticket items require a credit score check, a reflection of their financial trustworthiness. Purchases like a car or their first home both require them to have a history of good credit to receive a reasonable loan rate. Show them how to check their credit, and advise them to do it once a year to look for fraudulent activity.
Discourage the use of credit cards. Teach teens that credit cards allow you to borrow money, but the cost to borrow is very high (particularly for new accounts!). Explain that this is the worst kind of debt to carry over month-over-month. The best way to handle a credit card is to pay it off each month!
Encourage the use of debit cards. Start them off with a debit card that comes preloaded with a set dollar amount or one that’s connected to your bank account with parental controls. Both types are great for learning how to budget and track expenses without the risk of going into debt or destroying their credit.
Prepare them for college costs. Ensure they understand the true cost of the college degree they want, and help them research ways to make it financially possible. Encourage them to get a job to help pay and apply for grants and scholarships. Take them to local college fairs to compare tuition costs between four-year and two-year schools. Be transparent about the burden of student loan debt.
Use tips like these now to help ensure your favorite young people turn into a well-rounded adult when it comes to managing their finances.