Show your teen how to create a monthly budget
You can work with your kids on making a plan for spending an allowance or earnings from a part-time job. Once they're 13 or 14, they may be thinking about buying a car or making another big purchase in the next few years. That takes a lot of effort and planning.
Investing smaller sums with limited consequences is a great way for kids to learn about managing risk. They don't even have to use real money; online fantasy investing games make it easy to develop and practice important skills, and competition with classmates or family members may increase their interest.
Plan for college
Now is a good time to talk about the growing cost of higher education. Let your children know how much of the expense you'll be able to cover and whether they'll need to contribute through savings or work. If you've established a college savings plan, discuss how it works. Explain the difference between tuition costs at a private college and a state school. Discuss options for either government or private loans, and have them do some research on possible opportunities for scholarships. Open conversation and solid research now can be crucial.
Create learning opportunities
If your daughter is shocked by how much comes out of her first paycheck, sit down with her and explain about taxes and Social Security. If your son wants his own bank account, show him how to balance a checkbook or keep track of an account online.
3 Questions to Ask Your Advisor
- What basic budgeting tools might my children use to gain financial skills?
- Which types of savings accounts are available that can help my children reach their financial goals?
- How do I help my older children build credit and what are their options for opening their own accounts?