By Diana Simeon
Sure, it’s helpful for your teenager to head off to college being able to do their own laundry or cook a meal. But being able to manage money is not just helpful; it’s a cornerstone of responsible adulthood. That means it’s important for parents to teach teenagers financial literacy skills before college.
“Financial literacy is something most Americans can benefit from at all stages of life,” says Jeff Taraba, Vice President of Consumer Checking & Prepaid Product Management with PNC Bank. “By starting financial education early in the teenage years, we are empowering young adults with core financial knowledge to begin making better financial decisions today, and giving them the foundational building blocks to expand upon that core knowledge as their financial needs evolve over time.”
Here are four ways to get started:
Set the example.
You are an important role model, and your teenagers learn a lot just by watching you manage your own finances. If you want your soon-to-be college student to develop good habits, keep a close eye on how you yourself spend, borrow, save, invest and share. Think about what your own habits show your teenagers.
Embrace opportunities to talk about money.
Some families never discuss money in front of children, let alone with them. While you may choose to keep certain financial details to yourself, talking openly about general money matters is key to developing your teenagers’ financial literacy skills. Teenagers should be familiar with the big expenses their family has, such as rent or mortgage payments, food, car payments, vacations and (soon) college. But also talk about the less visible expenses, such as insurance, medical costs and utilities like gas and electricity. This can open up your teens’ eyes to the cost of things they may not know about.
Give your teenagers hands-on experience with saving and spending.
It’s important for teens to have hands-on experience managing money before they leave home. Many earn money from a part-time job; others may get an allowance. You should expect teenagers to save some of that money, and to use some of it to pay for expenses like gas for the car or going out to movies and restaurants. You may also elect to give teenagers a budget for bigger-ticket items—for example, clothing. Stick to that budget, even if your teenager makes a mistake, and with time, your teenager will learn to stick with it, too.
Help your teenager open a checking account.
Your teenager may already have a savings account, but teens also need to learn to manage a checking account. Using a debit card, making deposits, monitoring balances—these are all key skills your teenager will need once off at college. Don’t wait to get to campus to open a checking account. Opening one now, while your child is still at home, gives you plenty of opportunity to teach those skills.
Brought to you by PNC Bank.