Many teenagers take on some type of part-time after school job or full-time summer job when they are in high school. This puts them in the precarious position of earning money of their own for the first time but not necessarily knowing how to manage it. If you are one of those teens and are just now faced with the task of learning how to handle your money, learning the basics now will put you in a good position for the rest of your life.
Teen Money Myths
Teens who have not been taught financial skills at a young age are at risk of succumbing to one of the many money myths held by their peers. These myths include:
- Worrying about credit scores is something old people do.
- Bad credit can’t keep you from getting a job.
- Bouncing checks can’t hurt you in any way.
- Continuing to make minimum payments only on credit cards is the way it’s done.
- Nobody really reads the fine print.
Teen Money Issues
Thanks to the latest and greatest technology, today’s teens are used to getting instant gratification, and this can spill over into their money management skills. Rather than squirreling away some of their cash, they are prone to spending it pretty soon after they get it on the first thing that catches their eye. Instead of learning discipline and responsibility, they set themselves on a path that can follow them into their adult lives. The prospect of handling your money as a teenager shouldn’t be a burden, however, especially if you have been taught this life skill at an early age.
Teens in Debt
Even worse than spending rather than saving, today’s teens are taking on debt at a young age. Credit card companies begin courting teens at the age of 18, luring them into a financial situation, of which they may not fully understand the implications. Teens who don’t understand the basics of how to manage their finances are in no position to be taking on credit card debt. Debt at any age can cause emotional problems, especially if you are not prepared to get that debt under control. Debt and the emotional upheaval it brings can often lead people to begin abusing drugs or alcohol.
School-aged children who are able to add, subtract and multiply are old enough to begin learning about money management. In addition to setting them up for a financially secure future, working with money can help to bolster their math skills and problem-solving ability at school. Parents can have their child do chores at home in exchange for a small weekly allowance, and then work with them to budget their money for spending and saving.
What Teens Need to Know
Responsibility with money matters should be taught by parents, but even if you are already in your teen years, it’s not too late to learn. Take a basic finance course in school, do some Internet research or talk to your parents to learn the basics. BankRate.com suggests that at minimum, you should understand the following concepts:
- Balancing a checking account
- Establishing credit
- Paying taxes
- How to deal with debt
How Parents Can Help
In addition to the mechanical aspects of sound money management, there are several things parents can do to help bolster their teen’s fiscal responsibility. Start by talking to them about it to determine how much they already know. If they are familiar with the basics, it is time for you to discuss more advanced concepts with them, such as looking at the real cost of goods. When purchasing a car, for example, your teen may look at the sticker cost and not think about the registration, maintenance, fuel and tax costs associated with it.
Responsibility in all aspects of life is something each teen must learn along the way, especially in matters of money. Developing a poor credit score or bad spending habits early on is something that often follows people their entire lives.