Although they might think they already know everything, teenagers have a lot to learn before heading out into the real world. And while teenagers are generally not known for being logical and responsible—especially with money—given the right tools and opportunities, this is an ideal time to set a financial foundation for your child that will benefit them for the rest of their life. So, before your teenager leaves the nest to head out on their own, consider the following three tips to help them prepare for financial independence.
1. Let Them Earn An Income
Kids learn best by doing. Hands-on opportunities allow them to learn from the experience, regardless of the outcome. If your teen is old enough, let them take on a part-time job, either permanently or temporarily, during school breaks. If they’re not quite old enough (or too busy with extracurricular activities), pay them for doing jobs around the house, whether that’s mowing the lawn, making dinner, or cleaning out the garage.
Letting your teen earn their own income is exciting! It teaches them about taxes, gives them their own spending money, helps them become a more responsible and independent person, and allows them to feel empowered and capable.
2. Show Them How To Track Spending
We all know how little purchases can add up to huge expenses over time. Coffee on your way to work. Take-out on your way home. A small purchase on Amazon. Before you know it, $100 is out the window.
Your teen can keep their spending in check by tracking their own expenses. As a tech-savvy teen, they’ll likely find a budgeting app more appealing than using the old pen-and-paper method. A quick online search will reveal several apps out there that can help your teen stay on top of their spending and track expenses in real time.
3. Help Them Set Financial Goals
Once your teen has some income to work with, help them set financial goals. They may want to save for a car, some college expenses, or even a post-graduation trip with friends. Help them calculate how much they need to save each month to reach their goal by a certain date. This gives them something tangible to work toward and shows them the value of saving. If they are motivated to save for something in the future, it encourages them to weigh the opportunity cost of buying something now versus saving the money for later.
Invest In Their Future
Parenting a teen comes with a multitude of challenges, and teaching them the importance of financial independence is just one. But if you put in the hard work now, they’ll be less likely to depend on you financially in their 30s and beyond. And remember that you’re not alone; our team at 1on1 Financial is dedicated to helping you and your teen experience financial success. If you’re interested in partnering with us to start that journey, call our office today at 909-981-1720 or simply click here to schedule a free 15-minute introductory phone call!
About 1on1 Financial
1on1 Financial is an independent financial advisory firm specializing in guiding working and retired professionals, executives, and business owners along the path to financial well-being. Founded in 1997, we use a team approach to help our clients accumulate wealth, generate income, preserve their life savings, and strategically plan for the distribution of their estate. With more than 50 years of combined experience in the financial services industry, we remain true to our fundamental mission: to provide personalized guidance, treatment, care, and service so our clients can gain control of their future and feel confident in their financial life.