One of the most important things that a teenager can learn is finances. They don’t necessarily need to become experts, but it can seriously help to at least know some basics. Unfortunately, many schools do not teach children this, which can leave them confused when it comes time for them to handle their own finances. This is why it is a good idea for parents to make sure their kids have a degree of financial literacy built up before they leave home. Here are some specific skills to teach them.
Teach Them How Credit Works
For an inexperienced young person, having credit to spend may seem they always have the ability to buy whatever they want, without realizing the financial consequences of this. Teach them the importance of building credit, but also how to use it responsibly and what can happen if the card is used irresponsibly. Young people are unfortunately some of the most susceptible to poor credit habits.
Teach Budgeting Skills
Although full budgeting skills may not be needed if your child goes to university, it is one of the most important skills to learn in building long-term wealth. This is especially true when you factor in that young people’s success can be determined through their budgeting abilities. At the end of the day, the key to financial success is earning more than you spend, and budgeting skills can hammer home this concept.
Hammer Home the Importance of Net Worth
It is normal for a young person to think of the highest-earning job as the best, and there is a good chance that it may be. However, it is a good idea to teach your child other factors in play, such as looking for increasing value in assets and investments. This will help your child understand that long-term vision can be pivotal to financial success. Make the point clear that the short term numbers are not always to be desired over long term health.