Things You'll Need:
- A little time
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Step 1
If you are looking for resources to help teach your kids about finance, one of the first places you can visit is the Jump$tart Coalition website (see Resources below). This organization is dedicated to helping teens improve their financial literacy through various means of education.
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Step 2
A cash allowance is another important tool for kids, especially teenagers, to be able to manage. An allowance should ideally be an amount that allows the kid to buy something small now, or something big later. An allowance that is too large will not teach the importance of saving.
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Step 3
Teaching a teen to use and balance a checking account is also important. If the account becomes overdrawn, don't constantly bail your teen out of trouble; your teen needs to learn to pay for his or her own mistakes. Although balancing a checkbook may not be as necessary now as it used to be (due largely to 24/7 online access to account balances), it is still probably a good skill for your teen to at least understand.
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Step 4
Another critical concept that teens must be taught is the magic of compound interest. There are numerous calculators online that can help teens see this, as well as calculators that will show a teen how long it will take for them to pay off a debt. Price comparison when shopping is also valuable, even (and sometimes especially) when buying expensive items. Teaching them to use coupons and look for sales will get them into the lifelong habit of thrifty shopping.
Comments
shellbeth said
on 11/11/2009 I like this. One of my then-teen sons had a low-limit credit card that taught him a lot about managing money (it was a good experience, no crises). But I never thought about teaching them about compound interest! Good point.
arwen1964 said
on 8/8/2008 Interesting.
MIghtyDreamer said
on 8/2/2008 Cool thoughts.