Integrated Family Community Services 3370 South Irving Street, Englewood, CO 80110-1816 Ph: 303-789-0501

4 Tips to Help Your Teen Learn to Manage Finances

One of the most important lessons that parents can teach their kids is learning how to manage finances. Many teens enter adulthood without understanding how to handle their money, which can lead to acquiring debt. When you want to help your teen learn how to steward their money, there are a few important tips to follow.

1. Create a Mini Budget

It’s important to help your teenager understand the real world by teaching them to create a mini budget they can learn to manage. Calculate the amount of money they earn throughout the month in their part-time job, babysitting or allowance. Then make a list of their expenses, from going to movies, buying clothes, or making a car payment.

There are several budgeting apps on smartphones they could download and use as well. These apps track expenditures and earnings and users can allot specific amounts to categories like necessities or clothing or fun. They also give alerts to upcoming or late payments.

2. Open a Checking Account

Open a personal banking account in Utah for your teenager to help them take their money seriously, taking responsibility for each dollar they earn. You can monitor their spending habits and allow them to watch their money grow over time.

3. Discuss Saving

You’ll want to discuss the importance of saving to help your child prepare for emergencies or afford larger purchases in the future. Help them to establish a goal of saving $500 they can use for emergency expenses like car repairs. Teach them to set aside 10 percent of every paycheck to put in a general savings account when they want to save for extra expenditures, like an upcoming trip or a new car. These lessons will instill in them a lifelong knowledge of how to save for both emergencies and fun expenses.

4. Understand Credit Cards

You’ll want to help your teenager understand how credit cards work before the offers start arriving in the mail once they turn 18. Discuss how tempting it can be to use credit cards, but the more you use them, the more you must pay back. Debt accumulates and interest compounds over time. Bad habits like this can affect credit scores, which will impact the rest of their lives. Encourage your teen to avoid bad forms of debt with unnecessary purchases.

When you want to help your child learn how to manage their finances and take control of their money, there are a few ways to help them form good practices. By taking the right steps, you can help them to avoid making common mistakes and plan for the future with the money they begin to save.

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