When you have teenagers or young adults in the house, it might seem like everything requires some learning on your part. While they are no longer a child you can tell what to do, they also don’t have the life experience they need to make important decisions on their own, like how to manage their money. There are a few ways you can teach your child how to better handle their money so they can prepare for the future.
Help Them Plan for the Future
It can be hard to get your teen or young adult to start thinking about the future, but as they get older, it becomes even more important for them to think about their future now. This is the time for them to develop good habits. Even if your child does not start investing right now, they can still think about their goals. If they are thinking about going to college, they may need to take out student loans to fund their education. Since it can be difficult getting financing as a young person for a loan on their own, they may ask you to cosign for them.
However, cosigning on a loan for your student isn’t something you should do without first considering the possible drawbacks. If you’re wondering, “should I cosign a student loan?” you will want to answer a couple of questions before deciding. Ask them what they see themselves doing for the rest of their lives. Perhaps they see themselves working in tech, running their own business, or even becoming a parent. Their future goals will guide the decisions they make now.
Have an Open Conversation
Showing your teen what to do if debt occurs, how to handle credits cars, and overall how to develop healthy habits around money will set the stage for the rest of their lives. Of course, no one is perfect, and if you struggle in some areas of your finances yourself, you can still set a good example for your child. Make sure money is something everyone feels comfortable discussing. It should be more of a collaboration between the child and the parent. It is a chance to grow together.
Talk About Budgeting
Make sure your child understands the expectations around the way they spend their money. These expectations will help guide decisions around spending and savings. This doesn’t need to be a formal conversation where everyone sits down and goes over the budget. Things change every day for teens, so make sure your expectations are flexible as well. It can be hard for teens to budget because the usually do not have fixed expenses like food or rent.
A spreadsheet or using a budgeting app can be simple tools that allows your child to get everything down on paper. At this point, a budget may simply be a tracker of how much is coming in and how much is going out. This also helps you keep an eye out for impulse purchases so you can stop overspending before it becomes too much of an issue. You might be surprised at the insight you gain on how your child spends their money.