Is your child wanting a bit more control of their finances? It can be encouraging for you as a parent to hear your teenager wants to add some responsibility to their life. Still, failure to properly educate them about their money and how to handle it correctly can end in disaster.
It’s estimated that 82% of children want to learn more about their finances in school. Still, while it’s not currently a part of the education curriculum, the onus is on you as their parent or guardian to educate them. A boost to their financial education can be the difference between them improving their credit score to secure a mortgage and falling into debt eventually, so start early to give them the best chance of succeeding with their finances.
If you’re unsure what the best practices for teaching your teenagers about money are, this is the guide for you. We’ll take a look at teachings just about any parent can do to help their teens understand money better.
Teach them the basics of money management
When your teen starts earning money, they’ll need to know how to get the most out of it. Teach them the importance of budgeting their finances and introduce them to the 50/30/20 rule. This is where they spend 50% on bills, 30% on whatever they like, and put 20% into a savings account for the future.
Try to get them to make savings goals too as this can provide extra motivation to continue putting money aside. Some examples of what your teen could save for include their first car, a holiday, or the latest games console.
Understanding the value of savings accounts
Once your child has money to save, it’s time to help them find a suitable savings account. Teach them about interest rates and fixed-term loans so they can research to find an excellent savings account that can help them get more for their money.
Navigating the digital financial landscape
Online banking is the most common way people control their finances in our modern world, so they must understand how to use banking apps. Teach them how to send money, move money between accounts, and open new pots for their saving goals. It would be best to educate them on the potential dangers of online banking and how to keep their account safe using complex passwords and two-factor authentication.