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Teenagers tend to think that they know everything already, and often consider their parents to be clueless about what really matters to them. Such erroneous beliefs are not true, since parents are well aware of the dangers of poor financial decisions. Parents can and should teach their teenagers quite a bit about money and how to use it well.
Parents have experience on their side. They have dealt with money and the ups and downs that come with it. Parents can lend insight to teenagers about how to make and manage money. From day one, they can set teenagers on the right track to understanding the advantages money and good credit can bring into their lives. Here are some tips.
1. Start a savings account. When your teenager receives money from their first lawnmowing or babysitting job, take them to the bank. Saving money is an important part of managing money. Ask them to give their money a month to sit in the account before they spend any of it. This will be hard, but one job may pay forty dollars that will be gone in a weekend. After a month, their savings account may have $200 in it. That can buy a new outfit and leave some money for a rainy day.
2. Get a certificate of deposit. After a teenager has successfully saved about $500, have them invest this money in a CD. Interest rates will be higher on CD's the longer they are kept. Testing this out on a one year CD is a good idea so that, when the CD is opened, your teenager can think about what they should do with the money that has accumulated.
3. Don't make rash decisions. Request that teenagers not make sudden purchases on things they think they really want before sleeping on it for at least one night. Making rash decisions often brings buyer's remorse, something most parents are familiar with. Applying this "No Sudden Purchases" rule, teenagers will be saved from experiencing such remorse. For example, you could explain to a teenager that instead of buying a scooter today, being a little patient and saving money could score them a motorcycle
4. Develop a financial plan. Adults are told to come up with a budget for their family, but teenagers can benefit from a similar plan. Get them to list their wants and needs in two columns on a sheet of paper. Wants and needs are subjective things, so be sure that you explain the fine line difference. They don't have to do it in one sitting. Give them time to think about it.
5. Determine how much money and time it will take for teenagers to afford their wants. They can also decide what amount of money they want to save on a monthly basis in an effort to buy something they want. This way they will have some extra spending money for going out with friends or on dates.
Raising a teenager that understands money is not impossible. Starting when they are young children lays the ground work for future teachings. Teenagers that can take control of their money become adults that won't want for it.
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