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Ages 15-18
Your teenagers will likely have money coming in from a part-time job. This is the time to open a checking account. Be sure they know how to keep records and balance their checkbook. Give your teens more responsibility for handling money and making decisions. Older teens can shop for school supplies and clothes—with an expected allowance from you. Giving them control over spending, with a dollar limit, will force them to make decisions. For instance, they’ll soon realize that buying designer brands means fewer items for their money.
Reality Check
All young adults need to learn the cost of everyday life. Work up a realistic list of the expenses your teens would have if they lived alone. Include the cost of groceries; clothing; rent; utilities; car payments, insurance and gas (or public transportation); taxes; healthcare; entertainment; and miscellaneous (car repairs, household supplies, credit card bills, etc.). Then compare this list to your kids’ projected income. They’ll see how they’ll have to budget and possibly cut back on expenses in order to afford everything.
The Cost of Credit
You may consider letting your teens use your credit card, but there are drawbacks: you have no control over spending and are responsible for paying the bill. You can teach the cost of credit in another way by charging interest on a small loan you give your teens for a relatively costly item, such as a digital camera. Be firm about your kids paying you back with regular payments on time or else the lesson is lost.
The Difference of Degrees
You, of course, want the most for your children—including a good income. A college degree is their best bet. Set your kids on the path to financial success by emphasizing the importance of education. Insist on good attendance and exemplary effort at school. When your kids reach high school, help them shop around for a university. College websites will give them the low-down on schools and application information. High-school guidance counselors can tell your kids how to apply for financial aid. Even if your teens must get a student loan, it will pay for itself after a few years of employment.
