The importance of financial education for teens and young adults should not be underestimated. Lessons in financial education can help your teen or young adult avoid mishaps like overdrawing their bank account, accumulating debt by excessive credit card use, and not making a budget can go a long way to help them transform these slip-ups into valuable, lifelong lessons.
Taking the time to educate your children and guide them on a path toward financial wisdom is a smart choice for parents, so they're prepared to make savvy financial choices in their current lives as well as in the future.
How Parents Can Help with Common Financial Mishaps
Navigating the financial world can be a challenging endeavor, especially for teens and young adults taking their first steps towards financial independence. Common missteps, such as overspending or mismanaging a budget, are not just mistakes but valuable learning opportunities. By understanding these pitfalls, parents can play a crucial role in helping their teens and young adult children transform financial mishaps into life lessons. From setting up a savings plan to understanding the value of money, we'll explore strategies for your child for a future of financial confidence and competence.
Impulse Buying - A Teachable Moment
-
Financial Education Lesson: Learning the difference between wants and needs, and the importance of thoughtful spending.
One of the ways young adults can easily get into a financial crisis is through impulse buying. Begin with a lesson about the concept of a “wish list” for wants and fiscal responsibility of needs to prioritize planning and spending. A great strategy for parents is to encourage a waiting period before making purchases and by prioritizing what they spend their money on. This will help them make and achieve responsible saving and spending goals.
Credit Card Confusion - A Learning Curve
-
Financial Education Lesson: Not only will this enable your young adults to obtain a good credit score, but it will also help them understand responsible use and build a respect for credit.
Credit cards can be very alluring to young adults. The instant gratification they offer is enticing, but the debt and interest charges are a serious pitfall and a hard financial lesson to learn. It’s a good idea for parents to explain how credit works and the impact of interest rates to first-time credit card users. They may also want to help their young adults start building their credit history with a Student Platinum with Rewards Credit Card as a learning tool.
Savings - From Myth to Must-Have
-
Financial Education Lesson: Teens and young adults who have a savings account at an early age are more likely to make it a habit to continue saving so they can prepare for the future. Not only will it teach them the importance of having an emergency fund, but they'll also learn that it's rewarding to save and achieve future goals, making them much more money savvy as they get older.
When teens and young adults aren't taught the benefits of savings, they're missing out on a crucial life lesson. Learning to be responsible and having a budget instead of spending aimlessly and wasting their funds is always a good idea whether they're 16 or 26. Parents should encourage their child to set up a Savings Account and to make regular deposits. They can then be rewarded by setting a savings goal for an item they want and enjoy the feeling of accomplishment when goals are met.
Budgeting - Making it Fun
- Financial Education Lesson: Making and sticking to a budget will help young adults and teens better manage their money and teach them that being responsible with money can be engaging and rewarding.
While budgeting sounds like a complete bore; it doesn’t have to be. Instead of allowing teens to recklessly spend and waste their earnings or allowance, teach them instead how to stick to a budget that allows a bit of spending for everything they want and need. Technology gets the attention of the younger generation, so take advantage of fun budgeting apps to gamify the experience. Also be sure to set challenges and celebrate milestones when they successfully navigate their newly made budget.
Easy Financial Education Tips for Parents
Don't underestimate the value of talking to your teens and young adults about money, including credit, savings, and other financial concepts. Having these types of conversations on a regular basis can help them feel more comfortable when dealing with finances as they grow.
Parents who lead by example are building a great financial foundation for their children. Maintaining an open, judgment-free dialogue about money and introducing teens to financial management tools and apps can help reinforce their financial responsibility. Be open to listening, helping, and understanding that financial mishaps are learning opportunities and guide them on a path to financial independence.
Get Your Child Started on Their Financial Journey with Peach State Today
Peach State is here to help your young family members get started and stay on their financial journey. With a Peach State FCU eXtreme Teen Checking Account your teens will have a place to deposit their money while learning practical money management skills. If you have any questions of would like to get started, contact us today!
