Financial Literacy and Saving Habits for Teenagers

Today’s society offers teens a lot of eye candy that is quite expensive. From the pricey sneakers to the expensive video game equipment, many of today’s teens are accustomed to the “gotta have it now” line of thinking. They want immediate satisfaction and have little patience for waiting. These characteristics can follow a teen into adulthood and these are the traits that lead to overspending and debt. If a teen is not learning to budget and save the cash they have access to now, they may find it difficult to make that transition once they are adults.

Learning about personal finance should be a lesson that occurs at a young age but for the most part schools and other sources neglect to really focus on handling money effectively even from a young age. It is a parent’s duty to ensure that a teen is learning how to handle their money. While many parents do make a proactive attempt at teaching kids about money, many do not.

Tips to help parents teach their kids well MONEY saving habits

Don’t just give cash, make them earn it. Instituting strict guidelines for earning money by doing chores, odd jobs, and other duties to earn cash can help kids understand that later in life money will not just be handed to them. They will have to make the effort to earn it. This can not only help with money management lessons, it can help kids find a sense of direction and a desire to set goals.

Teach kids real money management lessons. Everything in personal finance that you use as an adult can be taught to kids. Budgeting, managing a bank book, tucking away a percentage of cash into savings, and how to save for big-ticket purchases are all relevant lessons kids can benefit from now as well as in the future.

Work with children on understanding the distinct difference between wants and needs. Help kids work on honoring waiting periods before making a purchase. It helps differentiate between things they want and things they need and teaches kids that spending money is not a decision to be made impulsively.

Teach older teens the importance of good credit, how credit is established and what it means to have bad credit. Many older teens may be asking for a credit card. A prepaid credit card may be a good teaching tool for beginners.

Make kids responsible for their spending. If your child has a cell phone, require them to earn the money to pay for the extras such as texting and accessories. If your child is of driving age, help teach them responsibilities of driving by having them pay for insurance and other incidentals.