Posted by The TaxAdvocate Group, LLC

What to Teach Your Teenagers about Financial Independence

What to Teach Your Teenagers about Financial Independence

Do you have teenagers? Do you want them to learn the proper way of handling money?

Teaching finances to your teen is significant at their young age for them to prepare for financial independence when they reach adulthood. During high school, personal finance is rarely taught. Parents are tasked to educate them on how to be financially responsible. Enhancing your teen’s idea of getting a job will be the first step towards preparing them for their financial independence, but the question is what is next to that?

You can follow these few steps in discussing with your teens and teaching them about financial independence: 

Track Spending

When your teen gets her first job the next thing for you to do is to open a bank account with him or her. The purpose of this is for you to help your teen track how he or she spent his or her salary, or by means of teaching your teen in tracking how he or she spends money.

To track money is not that easy. However, there are many apps to choose from that might help. There are particular apps where teens have the ability to write down the things they spent their money on or an app that can automatically notify them if connected to their perspective debit cards. Financial technology is taking advantage and will help teens to get a habit of tracking money.

Promoting in saving some money from their salary is another great tip as some of them spend their entire paychecks on non-necessary things. Having at least 25 percent of their pay goes for their savings is a big factor that they will save for their adulthood and future as well.

Set Goals

This year 2020 is the best time to teach teens about financial independence and even setting financial goals with your teen. One easy way to teach teens to prioritize how they want to spend their money is by means of physical writing. 

Parents should have to teach their teens how to live independently and avoid providing them anything. As they slowly become adults, parents should stop assisting them with finances so much; they can either stop providing their allowances or fewer money handouts for those things that are not necessary. Does your teen want to have the latest phone model or other gadgets? Is your teen going away to hang out with friends regularly? Find time with your teen and try to sit down and discuss those things to figure out the cost of whatever he or she is doing whether it is right or not to achieve the financial goals.

Setting a goal will not only teach your teen to save. This will also teach them to find more value in things. He or she will realize that having an old phone in good condition is better than buying the latest phone and instead put money on savings.

Avoid Debt

Discussing with your teen on how to avoid debt is the most significant thing in the new year. Debt is good but having too much of it can ruin lives, and if you fail to pay your debt it usually comes to irresponsibility. 

Because of credit cards and being irresponsible in terms of spending, young people often get themselves into debt. As parents, it is your role to sit down with your teens and explain how to properly use credit cards and ways of spending money in hopes you will be able to stop them from getting into debt when they reach adulthood.

Discuss Education and Future Plans

In life, having a plan for anything is important. It seems to be overwhelming especially for teens who think about maturity in figuring out what will happen to them when they reach adulthood. Taking the time to discuss this with teens and talking about their plans after graduating high school will leave a big impact on their financial wellbeing.

Some parents can’t even afford to pay for their child’s college tuition payment because a higher education is expensive. It is also necessary to discuss student loans and even payment plans with your teen and try to help pick a college that is suited for them that cannot also lead them in a massive amount of student debt.

As parents it is your role to help your teen in choosing their field of study and what will benefit their financial future, as well as their independence. Teach your teen to live in a practical way of living to help them to gain financial independence in preparing for their adult years.

The TaxAdvocate Group, LLC
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