Growing up means learning new things. For teenagers, life lessons can range from friendships to finances and beyond. While relationships come and go, financial knowledge can be the key to a happier financial future, including avoiding the pitfalls of bad debt, developing financial confidence, as well as independence. Let’s look at seven tips the teenagers in your life can use to achieve financial wellness.
- Spend Carefully: Saving is important but so is spending money. Encourage the teen in your life to avoid retail therapy and consider every purchase carefully.
- Build and Control Credit: As teens get their first debit and credit cards, they’ll start building a credit history. As long as they never miss a payment and carefully monitor every expense, they might see their credit score improve over time. Encourage teens to avoid carrying a balance on any credit cards to avoid interest charges and the possibility of negative credit reports.
- Monitor Every Debt: Teens should schedule a set time or date to log into and review their credit card, debit card, and/or loan accounts to better understand and manage their monthly spending.
- Create a Budget: Just because a teenager doesn’t have a mortgage or utility bills, they still need a budget. The goal is to learn how to avoid spending more than they make at work or with their allowance. By making a budget now, teens will more easily understand how to build a household budget when they are on their own.
- Make Plans for the Future: Like anyone, teens daydream about the future. This might include college, moving out, or buying their first or next car. Encourage the teen in your life to start saving toward that future with regular deposits to a dedicated savings account.
- Communicate with Family: One of the best ways for teens to learn about money management is to watch you. If possible, share the family budget, including how much you spend and save every month.
- Learn about Good and Bad Debt: When a person needs a new or used vehicle to get to school or work, an auto loan can be good debt. But buying a car that is not affordable or maxing out a credit card on clothes or electronics, can be considered bad debt. As long as debt is necessary and affordable, it is often good. When it causes stress and impacts overall credit, it is often bad debt. Knowing the difference can help a teen avoid years of financial heartache and struggles.
Boost Your Financial Wellness
More Financial Wellness Matters blogs on topics ranging from financial self-care to protecting your financial health are coming soon. Twice a month, we’ll dig a bit deeper into the relationship between financial health and overall well-being, shedding light on the behaviors and beliefs that drive money relationships. With simple tips and proven insights, we hope to enhance your financial well-being and help you live a healthier, happier life.