Teens are impressionable, so while you still have the chance, start teaching them some good money habits. Rachel Langlois from Cyprus Credit Union has the top four ways that parents can prepare their teen for financial independence. Check them out below!
- Let them make spending mistakes: Give your teen the opportunity to manage a part of their budget. If they mess up or run out of money, don't bail them out. Let them learn from the smaller mistakes to hopefully prevent larger and more important ones down the road.
- Teach them spending rules: Instead of just saying 'no' or 'we can't afford it,' help your teen to understand delayed gratification. It's important to sometimes say no now in order to enjoy better things in the future.
- Don't shield them from costs - show them the path: Have your teen pay bills with you to start to show them how much 'real life' costs. Before they leave the nest, help them build a budget and determine how much they're going to need to work to pay for their living expenses. Also, teach them about taxes and how a good retirement life means good savings.
- Make them work for wants: Teach them the options for buying and the consequences that can come from spending such as not having money left for other wants. Help them learn to save now in order to buy later. If they borrow from you, make it so that they have to pay interest just as they would if they borrowed from a bank.
- Week rule: When your child wants an unessential item, give them a week. If after one-week passes and they still want it, you can purchase it on the condition that they earn half of the money by performing work at home. They cannot use their savings to pay their portion - they must do work. This forces them to think about whether or not the work is worth it or if it was a fleeting desire.
For more, visit www.cypruscu.com.