As a parent, one of the most important lessons you can give your child is about money. Managing our finances is something we are never taught about in school. We have to learn through experience. However, money mistakes can be costly - excuse the pun! They can stay with us for years and years to come. This is why it is important to make sure your children are financially savvy. With that being said, read on to discover more about teaching your teenager about money.
Explain credit cards and the dangers of them - Simply warning your child away from a credit card is not a good idea, especially as they are going to need one to improve their credit rating. Instead, you need to teach your child about how credit cards work. You can find a good starting point at https://www.moneysupermarket.com/credit-cards/credit-card-guide/. Once you have told your child about how cards work, make sure you explain the dangers. You can even point them in the direction of some case studies regarding people that have gotten into credit card debt.
Teach your child about the magic of compound interest - Again, simply telling your child that they should save from an early age is not good enough. You need to explain why this is the case, and this involves explaining the magic of compound interest. You need to show your child how their decisions today will impact their future too.
Teach them about student loans - A lot of students take out loans with little thought. Yes, going to university is an investment. However, there is no guaranteed career or money tree at the end of it. This is why you need to make sure that your teenager is fully aware of what a loan means for them and what they are agreeing too. You should also head to refinancestudent.loan and teach them about the options in terms of paying their loan back.
Give them the responsibility of a bank account - Last but not least, it is important to make sure your teenager has the responsibility of bank account. You can easily set up simple bank accounts for children today. This will help your child to take money management to the next level, as they will have a greater level of responsibility. However, there is not the risk that comes with accounts for adults, i.e. overdrafts and interest charges.
So there you have it: some of the important lessons you need to teach your teenager regarding money, as well as some tips on how to teach them. The last thing we want for our children is for them to end up in debt because they made a mistake out of naivety. If you teach them the lessons mentioned above, you can go a long way in making sure that this will not happen.