Steps to take to set your teenager on a smart financial path.

If you have a teenager, part of your role as a parent is to prepare them to successfully transition into adulthood. This could range from teaching them how to cook, to do their laundry, schedule their own appointments, and more. As your teenager begins to earn their own money, whether through household chores, or their first jobs, it’s important to teach them about personal finances and how to best manage them. 

There is an array of different steps that can be taken to encourage learning about age-appropriate personal finances that could benefit your teenager as they grow. 

1. Start early – Introduce financial concepts at an early age by discussing basic money concepts such as spending and saving their money. As your child grows, there are more in-depth lessons that can be taught that are relevant to their age. Google is great tool for different activities and lessons.

 
2. Introduce the concept of earning – As your teenager becomes more independent, they typically want to experience having their own funds to spend. To help them, come up with ways they can earn money, whether it’s household chores, babysitting, mowing lawns, or getting a part time job. This experience can give them a better understanding of earning money and the value of hard work. 

3. Lead by example – Demonstrate responsible financial behaviour through budgeting, saving, and making informed spending decisions. Talk to your teenagers about your thought process and include them in in the process. For example, have them help prepare your grocery list by looking through the flyers for the best deals and explain the importance of sticking within the budget. At the end of the shopping trip, compare the final receipts to the budget and talk about if you stayed within the budget, or what changes could be made in future trips. 

4. Help them get their own bank account – After getting your teenager their own bank account, teach them how to properly manage that bank account by teaching them to monitor their transactions, save a portion of any earnings in a separate savings account, and more.

 
5. Discuss credit cards – Introduce the basics of credit cards before they are old enough to acquire their first one. Explain how credit cards work, the impact of the interest rates, the importance of responsible borrowing, and how credit cards can greatly affect your credit rating. 

6. Teach smart spending – Ensure your teenager learns the difference between wants and needs when it comes to their spending. Teach them to prioritize spending on necessities and to plan and save for any discretionary purchases.

7. Involve your teenager in paying the bills – Explain how you manage the household bills, track due dates, and budget for the bill payment. It’s also important to explain the consequences of late payments and the effect it could have on your credit report. 

8. Budgeting – As your teenager begins earning money, it’s a good idea to teach them the importance of budgeting. Have them list their income, and any expenses they may need to budget for, such as a cell phone bill, car insurance, gas, etc., and help them figure out what they have left to save, and for discretionary spending.  This will help them build good habits that will help them as they become an adult and acquire more financial responsibilities. 

The idea of entering adulthood and being on their own can be an exciting but intimidating time for teenagers. By providing them with the proper tools and knowledge at a young age, you better prepare them and set them up to create good financial habits. 

If debt is holding you back from being able to successfully incorporate personal finance lessons in your day-to-day life, there are options that can help you get on track.

If you are looking for advice, or a second opinion about your debt, it does not cost anything to talk about your options. Every financial situation is unique and viable options can differ from person to person. A conversation free of judgment and cost, is the first step to determine options for debt that make sense for you. For a free consultation, please call or text (506) 645-1814 or email jaime@tackledebt.ca; or visit www.tackledebt.ca.