As per a survey, seventy-five percent of kids wished that their parents taught them about money. Why? Because most schools do not teach financial management, even at the high school level. This leads to many kids being clueless and lost when it comes to money. It even affects their financial management at later stages of life.
Thus, as a parent, you should teach your kids about finances. Finance is not just an area of interest or a career choice; it is the knowledge required to handle your life properly. If you have teenagers at home, here’s some financial advice that you should provide them.
Teach Them Contentment
Today, teenagers aren’t satisfied with what they have. They keep seeing new things on the internet, which pulls them into the comparison trap. “Dad, John’s parents bought him a brand-new bike! Even I want one.” “Mom, Alice got a new necklace worth $2,000 at her birthday party. Even I want one!”
Teach your teenage kids to be content with what they have. Let them know that even if the bike is old or new, the roads and the destination are the same. Similarly, whether you buy a $200 necklace or a $2000 necklace from the best jewelry store, the people who truly love you will love you the same.
Keep Clear of Student Loans
Americans owe more than a trillion dollars in student debt loans as of 2020, with more than forty-five million borrowers. Student loans have become the second-highest consumer debt category in the country. While a student loan can help complete education, it has negative effects on later life stages.
Thus, even before your kids apply to a college, sit down and discuss how they will pay for the college. Let them know that student loans should be considered as a last resort. Inform them about alternative options like enrolling at a community college, taking up a part-time job, or applying for scholarships.
Stop Impulsive Buying
“Mom, Dad, can you please buy me the newly launched iPhone?” or “This branded t-shirt looks nice. Can we buy it?” Parents often face such impulsive buying requests from their teenage kids. Most parents give in to their kids’ demands and make such impulsive purchases.
If you want to teach your kids financial responsibilities, you should let your child pay for such items from their allowances or commissions. Teach them to wait and think over their decision for a day. The t-shirt and the iPhone will still be there the next day. Let them purchase with a level head. A study has shown that teaching teenagers finances can help reduce instances of impulsive purchases.
Stay Away from Credit Cards
Almost every credit card company targets teenagers who just turned eighteen. Credit cards help us buy things without the required bank balance, but it also lands up many individuals, especially teenagers in a debt trap. Teenagers keep making unnecessary purchases due to the flexibility and offers provided by credit cards. They end up being other credit card victims. They have to shell out the spent expenses, the credit card interest, delayed payment charges, etc. This can make them financially insecure.
Thus, to prevent your kids from falling into the credit card trap, teach your kids to stay away from them. Make them realize that credit cards aren’t necessary and to always live below their means. Ask them to purchase a debit card instead of a credit card, as it only allows purchases limited to the bank balance available. This helps prevent overspending and better money management.
Teach Them About Passive Income
Nowadays, a single source of income is not enough to maintain a decent lifestyle. Inflation is rising, living costs are increasing, education is getting costlier, and so are homes and other aspects of our life. Even if both the parents are working, sometimes it isn’t enough to get through the monthly finances. So, imagine the situation a few years from now, when your kids will be married and become parents!
Thus, teach your kids about the importance of having more than one source of income. Passive income can help cover various additional and accidental expenses that one faces from time to time. It also helps add to your financial savings. Educate them about stocks and the share market, affiliate marketing, investing, peer-to-peer lending, and other passive income sources.
Teaching your kids about finances will take time, especially with teenage kids. But, if you want to see your kids financially successful in the future, you must start imparting financial knowledge right from a young age. When they get older, they will thank you for teaching them such an essential skill.