Most parents talk to their teens about the fact of life, but overlook the costs of life, like buying a car, using credit or saving for a home. We’ll help you prepare your teen for the financial realities she’ll face as an adult.
Salt Lake author and mom, Amy O’Grady, hopes her book gets parents and teens talking about how to handle money.
1. Create savings with a purpose.Car?College? Training program? Travel? Identify the biggest and most meaningful goal, then challenge your teen to place half of all the money s/he receives from any source into a savings account dedicated to that purpose. Your teen benefits from reaching a long-term goal, strategizing over any shortfall and meeting the challenges of saving money.
2. Buy the safest car you can at $5,000 below what you think you can afford. The lesson for your teen to carry forward into any major purchase is that money in reserve will almost always go towards “hidden expenses” – in this case, taxes, fees, insurance, gas, accessories and maintenance.
3. Warn your teen away from borrowing or lending money until s/he talks with a licensed, qualified and trusted accountant, attorney and/or financial planner. Experienced professionals in these fields have seen it all and will explain in ideally caring but gruesome detail just how borrowing or lending can impact the financial and emotional quality of life for your teen. The money we parents will spend on professional fees is the proverbial drop in the bucket compared to the scramble of helping your teen recover from large-scale debt, investment scams or business ventures gone awry.
4. Present your household as a business. Kids never get to think about the place they live generating what heads of the household or business managers would call “operating expenses.” Instead of simply saying yes or no to various requests for money, make it a point to introduce your teen to the bigger picture. I have a comprehensive list of 55 household expenses in a chapter I call “Making Ends Meet.” This list is also available on my blog. Without even bothering to fill in dollar amounts, your teen gets an idea of all it takes to run a household. Make a game of reducing expenses for a month, and s/he might even choose which ones to target! Parents then have an ally in their teen in the ongoing effort to control expenses.
5. Be willing to invest in your teen’s interests. This tip has more to do with making sure your teen has options for money in the first place. Whether s/he enjoys art, music, multimedia, sports, or gardening, budget as much as you can to support his/her efforts and connections to those in a related field. If we as parents view these teen years as the time to support (healthy) mentorships and apprenticeships, teens will have a viable place to start in their search for possible lines of work and income.
For more information, visit www.mybestself1.com.