Smart money management skills are not inherited, but are learned. As parents, it is important to teach your kids about ways to manage their money early on. As kids mature and get closer to the real world and college, knowing how to manage money effectively can be the difference between a financially healthy adult or one who ends up in overwhelming debt.
Skills For The Future
When your teenager becomes old enough to earn money through chores or a paid job, it is important that they begin to understand bank transactions and paying for expenses. While you don’t want to overload them too quickly, helping them set up a simple checking and savings account can be a great first step. The concept of saving is one that is lost on many adults, but teenagers aren’t too pressured by bills and expenses yet to forget about their savings. Show them how to move money over from their checking each month to demonstrate the importance of saving money.
At some point, all young adults should learn how to balance their account registers and track their spending. Giving your teenager a debit card is a good idea, as long as you help them set up rules for spending prior to the use of the card. Allow your teen to spend some of their earnings here and there, along with making sure they deduct these expenses from their register. It is important that kids learn to keep an active eye on their money before they become distracted by the pressures of adulthood. This helps them establish a routine of smart money management.
You may even want to allow your teen to overdraw a time or two to experience the pain of checking account default, while there are few consequences. The experience of repaying the fees and getting back into the black is a valuable experience that anyone will carry into adulthood.