Learning about personal finance is crucial, but this skill isn’t always taught in school books. Teens often learn about money management through real-life scenarios, and for some, this knowledge isn’t gained until their 20s.
However, becoming financially literate earlier in life promotes a healthier and more responsible relationship with money. Simply put, teens who are taught the value of money are more likely to craft a more secure financial future.
Whether you’re looking for personal finance for beginners or want to find tips to help your children learn and grow, keep reading. We’ve gathered some quick and simple strategies you can explain to your teens today.
Basics of Money Management
When it comes to finance tips for young adults, it’s always best to start at the very beginning with income, expenses and budgeting. Without these three pillars, personal finance can become confusing — especially to teens without prior knowledge.
Explain how income is money that’s received, expenses are what you spend, and budgeting is the process of planning and balancing the two. It can be helpful to relate the terms to your teen’s experience. For example, income could represent pocket money or cash from a part-time job.
Stress how budgeting allows you to track your spending while enabling you to meet financial goals. Jam jar budgeting is a simple format that can help younger children understand the concept better. Always substitute relevant examples to give your young ones a personal perspective on the matter.
Discuss Why Saving Is Important
While talking about budgeting, broach the topic of savings and explain how they’re essential for a secure future. Provide relevant reasons for saving, such as for a car, college or an emergency fund. Stressing the importance of saving early on will help them learn not to spend a whole paycheck in one go, no matter how tempting it may be!
Debit vs Credit Cards
Another central topic related to financial literacy for teens is “debit vs credit cards”. It’s easy to mix these two cards up without any practical experience with them. Discuss how debit cards are like a wallet with money you already have, and credit cards allow you to borrow money, but require you to pay it back later. See what not to do with credit cards here to show your teen a balanced view.
Banks like Natwest already offer bank accounts for children and teens. Debiting their pocket money into one of these safe accounts can help them learn faster and prepare them well for the future.
Learning Through Financial Responsibility
Overall, teenagers should know the value of money and that it’s not an unlimited resource. This knowledge is best learned through personal experience and giving them the ability to manage their own budget is extremely helpful.
The two key lessons financial responsibility teaches are:
- To spend only what you can afford
- How to navigate unplanned expenses
Giving financial freedom to your teen while they’re still at home allows them to experiment with budgeting techniques without the stress of being completely independent. It’s never too early to start exploring money management, and they’ll thank you for the introduction when they’re older.
Want more helpful personal finance resources? Explore the Cash Asap blog to learn more. From eco-friendly budget tips to how to complete a no-spend month, we have strategies and information for all financial needs.
