Recently, Georgia became the thirteenth state in the country order personal finance education for high school students. According Next generation personal financeGeorgia joins Alabama, Florida, Iowa, Mississippi, Missouri, Nebraska, North Carolina, Rhode Island, Ohio, Tennessee, Utah and Virginia in requiring teens to take at least one semester of personal finance before can graduate.
while this The increasing trend of states requiring financial literacy to be taught in high school is encouraging, it still means that only “35% of students in the US will have access to a financial literacy class.” according CNBC. AN most children and adolescents will continue you need to get this education elsewhere.
Since money management is not traditionally taught in schools, the onus falls on parents. In addition to what we have written above about What to teach your child about money at every ageHere are some basic financial skills every teen should know before they graduate from high school.
All teens should be taught how to set a realistic budget. Teach them (with their own statements) to collect financial documentation, such as W-2 forms and pay stubs, utility bills, credit card statements, receipts, and all other financial documentation relevant to their (future) income and expenses . Later create a list of monthly expensesThey must know how to break them down into fixed and variable expenses. Teach them to compare their total income to expenses, so they can make a savings plan for their leftover monthly income or determine where to cut back so they don’t live beyond their means.
Children and teens should be taught to compare prices, taking into account the price, volume, and quantity of things like groceries, personal hygiene items, toys, sports equipment, and other accessories, whether in the aisles of your Stop’ n local shop. , or on Amazon. Take them grocery shopping and narrate your own process of evaluating and finding the best value. Or give them a set amount of money and a shopping list and challenge them to shop for their family’s weekly necessities with those limited funds.
DIY life skills to save money
Being able to do basic housework can save you some serious money. Parents should actively teach children how to do laundry, plan their weekly meals, mend and hem clothes, cook, clean, unclog a toilet or drain, and perform basic car maintenance such as changing the oil or change an air filter. They will be in a position to save money otherwise they would have spent on tailors, maid services, takeaways and mechanics.
How to split a bill (and calculate tips)
Everyone should know how to split a restaurant bill and properly tip waiters. Teach your kids to add tax and a little more tip than usual to their amount (to cover for members of your party who will inevitably miscalculate). Also teach them that group pay philosophies differ. Some believe that all group dining purchases should be divided equally by the number of guests, regardless of who ate whatwhile others will calculate specifically by what they ate and drank. Kids you should be prepared for both scenariosand know how to quickly calculate a 15 -20% tip.
The importance of good credit
While the credit card industry wants our children to believe that credit and purchasing power are free, plentiful, and available in perpetuity, it is our job to teach them that it is not. help them understand the importance of having less credit cards and paying his bills in full and on time and understand how much they will pay in interest for carrying balances from month to month. (This is where you illustrate how easy it is to get into debt and how long it can take to pay it off.) Also tell them about the Benefits of a high credit score—lower interest rates on home loans, more likely approval of home rentals, and better auto insurance rates.
How to set short-term and long-term savings goals
Help your child or teen set short-term and long-term savings goals. This can start at a young age by asking your son to invent a toy he wants and challenging him to save a few dollars from your allowance each week or month to buy it on her own. Praise progress and keep it visual, as financial advisor Rachel Stewart said Paternal, “either by keeping the money in a clear container or by showing your child your bank statement.” Being able to see your money stack up is a great motivator.
As they get older, work with your teen to set a long-term savings goal — like a car, for example — and help them figure out how to adjust their budget, savings, and income to meet that goal.
Investing can be intimidating, even for people in adulthood. Expose your child to the power of investing and the time value of money, whether through a basic investment classan app like Green light or by allowing them to invest a small amount of money in a custodial account.