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The teenage years seem to sneak up when you’re least expecting it. I’ve now had a teen for almost a year and I’m realizing just how little time I have left with him in my home. One of the many things I want to teach him before he leaves the house is how to manage money. He needs all the help he can get! Teaching teens money management skills doesn’t have to be hard and here are a few tips that will help.
Teaching Teens Money Management Skills
Debit vs Credit Cards
It is easy for a child to see a credit or debit card as free money. You take your plastic card, swipe it at a store and you get to take things home! Easy! But as kids grow into teens, they need to understand how a card works and the difference between a debit card and credit card.
How a Credit Card Works
A credit card is definitely NOT free money. My parents and grandparents taught me to have a credit card for emergencies only. We need to teach teens that a credit card is essentially borrowing money that you will then have to pay back WITH interest. And interest is BAD unless someone is paying it to you!
Teach teens to read the terms and conditions of different cards and help them understand the dangers of getting into too much credit card debt.
As my grandpa always said, “Don’t buy things you don’t need, with money you don’t have, to impress people you don’t like.” 🙂
How a Debit Card Works
Debit cards work by giving you access to money that you have actually earned and deposited into your bank account. You still need to keep an eye on your purchases and make sure that you don’t overspend, which can relate in hefty overdraft charges.
Greenlight, the smart debit card for kids, is the perfect way to introduce a debit card to kids and teens. Greenlight helps teach the basics of money management and gives teens a safe way to practice safely using a debit card.
The Greenlight debit card app allows parents to add money to their child’s account and they can control where and how much money is spent at one time, making it a great learning tool for a teen that is just begining to learn about budgeting.
Greenlight is safer than carrying cash because if the card is ever stolen, a thief will have a really hard time figuring out which stores they can use it at and parents can turn the card on and off at any time. Parents receive an instant notification any time the card is used so they are always in the know.
Don’t Spend what You Don’t Have
As teens learn to budget their money, they will realize that the amount in the bank isn’t just a number. It will run out if it isn’t replenished! If they really want to be able to pay for something, then they need to get a job or learn a skill that can make them some income. For young teens and children, parents often pay an allowance for extra jobs done at home. They will start to learn that effort and hard work can equal the ability to purchase things that they want.
Greenlight has a convenient automated allowance feature that let’s you set it and forget it so your kids can receive their allowance each week. It also allows you to keep a bit of control over where the money is spent and how much can be spent at certain retailers. You can decide how much independence your teen is ready for.
Always Track Your Spending
Once teens start getting money in the bank, they need to learn how to track their spending. This can be easily done in a spreadsheet or even in a notebook dedicated to their income. I had my first checking account when I was a teen and I started paying for things such as school clothes with money that I had made throughout the year. It really helps you to understand how quickly money can go when you have a set budget for something and stick to it.
The Greenlight App lets your teen track their spending right from their phone or tablet. They can see how much money they have available and will be able to make smarter purchases based on the amount they have left in their account. The Greenlight app is available on iOS or android.
Sign up for Greenlight before 9/30 and they’ll deposit a $20 bonus into your account after the 30-day free trial ends. *deposit bonus made approximately two weeks after free trial ends. It is a great way to see if Greenlight is a good fit for your family without any risk.
Teach Wants vs Needs
It is definitely okay to purchase things that you want, but we need to teach teens that wants have to come after needs. As an adult, the mortgage and bills have to come before vacations, clothes, etc. The earlier we can teach that to teens, the better.
Learning money management is a life skill that will affect teens for the rest of their lives. Teaching your teen money management skills should be a huge priority before they leave the house and move out on their own.
What tips do you have for teaching teens money management skills?