Thursday, June 16, 2016
Three Ways to Help Foster Financial Literacy in Your Teenager
Neill Sullivan is the founder and CEO of Sullivan Management Company and REO Homes. In addition to his work rehabilitating Victorian and vintage houses in both Oakland and Berkeley in California, Neill Sullivan is also passionate about promoting financial literacy among youth.
With average personal debt at an all-time high, the importance of teaching children and teenagers responsible personal finance practices is more important than ever. Below are three important way you can help get your teen off to a good start in building financial literacy.
One of the most important lessons you can teach your teen is the importance of delaying gratification. Thousands of dollars worth of credit are available to most of us at the touch of a button, but rather than going for that quick fix, the act of saving is a valuable teaching tool for teens, and adults as well. Children don't tend to think in terms of the long game. They can be tempted to blow their allowances and paychecks on that expensive pair of shoes, but you can stress the importance of saving for later by illustrating how they could eventually buy something more expensive, such as a car, if they put that money aside.
Another great lesson you can teach your teen is the importance of a budget by making them stick to one each month. Instead of doling out dollars here and there when they ask, give them a set amount at the beginning of each month with the understanding that it's up to them to manage it wisely. In the first few months, they may come to you later and ask for more money, having spent through their original allowance too quickly. By not giving in, however, you teach them a valuable lesson about planning their money wisely according to a budget.
Even better than an allowance, nudging your teen to get a job can go further toward developing financial literacy in their lives. When they don't receive an allowance and have to work for their money, your teen might think twice about blowing it all at once, especially if they are paying for expenses such as car insurance.