Grand Rapids, Mich (WOTV) - Studies indicate that over 50% of teens fail basic financial literacy type testing which is based what they need to know for the future about managing debt, building healthy credit, having a savings and using a checking account. Here are some helpful ways that you can help your teen learn more about good money management, and get on the road to having a financially fit lifetime:
Earning Money- Have your teen consider earning money outside of your home. Having a "real" job can provide a sense of accomplishment and responsibility. It can even be a great start to learning about what type of future career they're interested in, and networking with work professionals.
Take the application and interview process seriously, and even practice interviewing at home on how to answer questions about how they will manage work and school, and valuable traits they bring to the job.
Having an Account- Open a savings and checking account at a local credit union . Your teen can learn about earning interest on their money, and become exposed to online & text banking tools to keep track of their money. As a parent, you should place yourself as a joint holder on the account also to be able to be able to help them manage their first account.
Building Savings- Teach your teen the importance of "paying themselves first" whenever they make money. Paying into a savings account on a regular basis can be the first "bill" they learn to take seriously and pay regularly. Automatically placing a portion (even just 10-15%) into a savings before they're tempted to spend will help them gradually build a safety net of savings.
Checking & Debit Cards-You may want your teen to get a debit card with their checking account. It allows them to make withdrawals at an ATM, provide convenience at the gas pump and for other spending needs. You can set up daily access limits so they don't accidentally go overboard with daily spending.
Learn About Credit- If you're comfortable about your teen learning about managing credit, some financial institutions offer secure credit cards with limited access ability to help them (under your guidance and control) learn about spending with credit. You'll be offered a card with a low credit limit. Or, a pre-paid card is another option to offer them the convenience without risk of overspending.
If you choose to go this route, help them monitor spending, avoiding impulse purchases, and knowing the importance of paying off their debt quickly – not simply making minimum amount payments that can add up to spending much more than they originally intended.
Other tips to learning about personal financial wellness- Consider having your teen sign up for a personal finance class, or joining an investment club at school. Also, have them sit down with a professional at their local credit union who can review basic financial tips with them.
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