If you’re the parent of a teenager, you want to guide them towards making smart financial decisions in the future. But personal finance seems like such a broad topic that you might not know how to begin teaching them! By enrolling your teen in life coaching sessions with Powershift Coaching, you can help them start their young adult life off on the right foot. Furthermore, these tips cover a few essential aspects of personal finance that every teen and young adult should understand.
Future Career Choices
Maybe your teenager has already settled on a future career idea, or maybe they feel confused about what path to pursue. If standard career paths don’t appeal to them, you could introduce your teen to the idea of entrepreneurship. Talk to them about the possibility of starting their own business one day!
Entrepreneurship starts with choosing a business idea that your teen genuinely believes in and understanding what they can deliver rather than overpromising. Planning ahead and monitoring trends and market conditions are also integral to startup success. You can encourage your teen to start following financial news to gain a deeper understanding of these concepts.
Budgeting and Saving
If your teen has their first part-time job, they need to begin budgeting and setting aside money to save. You can help motivate them by encouraging them to set small financial goals, such as saving for gas money, a prom dress, a trip with friends, or holiday presents for their relatives. Inspiring Savings recommends sitting down with your teen to write down their usual expenses and compare them to their income from their job. Then, figure out how much they can save per month. You can help them set up a savings account with a local bank.
Using Credit Cards Wisely
Before your teen gets their first credit card, you should explain how credit cards work and why using them improperly can land them in big financial trouble. Credit Sesame recommends giving your teen a prepaid debit card that you can monitor to let them get used to the practice of making purchases with a credit card up to a certain limit. Later, you may want to give them a credit card with a very low limit to ensure that they can pay it back on their own each month.
Taxes can be complicated, but you can explain the basics to your teen. When they get their first paycheck from a part-time job, go over the taxes that have been taken out and answer their questions. You can turn to educational videos and articles to help you explore their topic with your teen.
Balancing Digital “Checkbooks”
Although most people do not use physical checkbooks anymore, you can still teach your teen about the practice of “balancing” their checking account digitally! They should compare their withdrawals and deposits to the transactions displayed in their bank account and make sure that their calculations match their current account balance. This will train them to keep an eye out for discrepancies so they can spot problems immediately. If they notice anything that seems wrong, they can run through their calculations again to double-check. You can walk them through this process.
As your teen starts working and saving their own money, they will need to know how to manage it. You can help them learn the ins and outs of budgeting, saving, paying taxes, and more. By teaching your teen about personal finance, you can prepare them for the realities of adult life.
Does your teen need guidance through a life transition? Powershift Coaching can help your teen navigate life with confidence! Send us a message through our contact form today to get started.
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Content – Ed Carter