Recently, Georgia became the country’s 13th state to require personal finance education for high school students. According to Next Generation Personal FinanceGeorgia joins Alabama, Florida, Iowa, Mississippi, Missouri, Nebraska, North Carolina, Rhode Island, Ohio, Tennessee, Utah, and Virginia by mandating teens at least one semester of personal finance before can graduate†
While this Growing trend of states requiring high school basic financial literacy is encouraging, it still means only “35% of students in the US will have access to a financial literacy class” according to CNBC† A majority of children and adolescents will still should receive this training elsewhere.
Since money management is traditionally not taught in schools, the responsibility rests with the parents. In addition to what we wrote about before what to teach your child about money at any agehere are some basic financial skills every teen should know by the time they graduate high school.
Every teen should be taught how to create a realistic budget. Teach them (with your own statements) to collect financial paperwork such as W-2s and pay stubs, utility bills, credit card statements, receipts, and any other financial paperwork relevant to their (future) income and expenses. After create a list of monthly expenses, they need to know how to split these into fixed and variable costs. Teach them to compare their total income to expenses so they can either create a savings plan for their monthly remaining income, or determine where they can cut costs so that they don’t live beyond their means.
Children and teens should be taught how to compare shopping, taking into account price, volume and quantity of things like groceries, personal hygiene items, toys, sports equipment and other incidental items – whether that be in the aisles of your local Stop’ n Shop is , or on Amazon. Take them on errands and tell your own process of evaluating and finding the best value. Or give them a fixed amount and a shopping list and challenge them to buy your family’s weekly necessities with that limited money.
Money Saving DIY Skills
If you can do simple household chores, you can save a pretty penny. 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 car. oil or changing an air filter. They will be able to save money they would otherwise have spent on tailors, cleaning services, takeaway and mechanics.
Split a bill (and calculate tips)
Everyone should know how to split a restaurant’s bill and tip the staff. Teach your kids to add taxes and a little more tip than usual to their amount (to cover members of their party who will inevitably get the math wrong). Also teach them that philosophies about group payments differ. Some believe that all purchases for group dinners should be divided equally among the number of diners, no matter who ate what?while others will charge specifically for what they ate and drank. Children must be prepared for both scenariosand know how to quickly a . can calculate 15 -20% gratuity.
The importance of good credit
While the credit card industry wants our kids to believe that credit and purchasing power are free and abundant and always available, it’s our job to teach them that it isn’t. Help them understand the importance of having less credit cards and pay them bills in full and on time, and understand how much they will pay in interest for transferring funds from month to month. (Here illustrates how easy it is to get into debt and how long it can take to pay it off.) Teach them about the benefits of a high credit score†lower interest rates on mortgages, more likely to get home rental approvals, and better auto insurance rates.
How to set short and long term savings goals
Help your child or teen set both short-term and longer-term savings goals. This can start at an early age, by asking your child to come up with a toy they want, and challenging them to save a few dollars of their allowance each week or month to buy it themselves. Praise the progress and keep it visual, as financial advisor Rachel Stewart told paternal, “by keeping money in a clear container or by showing your child their bank statement.” Being able to watch their money accumulate is a great motivator.
As they get older, you can work with your teen to set a long-term savings goal, such as a car, for example, and help him figure out how to adjust his budget, savings, and income to reach that goal.
Investing can be intimidating, even for people well into their adult years. Expose your child to the power of investing and the time value of money, either through a base investment classan app like Green light or by having them invest a small amount in a custodial account.