7 Tips for Teaching Your Teen to Be Financially Independent

7 Tips for Teaching Your Teen to Be Financially Independent

Our job as parents is to teach our children to be strong, confident adults who can become successful members of society. Of course, a teen is still a kid, but there are some things you can do to better prepare them to be financially independent.

1) Have them Work

School is the most important thing, but a summer job or after school job is a great way for a teenager to become financially independent. Even young teenagers can find ways to make money such as a paper route, grass mowing, snow shoveling, or detassling corn. Most fast food jobs hire at the age of 15 or 16 with parental permission.

2) Charge Rent

Another way to help your teenager be financially independent is to charge a small monthly amount for rent. This teaches your teenager how to pay bills and gives them a feel for the real world. This could be $25 a week or a month depending on how much money they make working.

3) Open Accounts

In this day and age, it isn’t always safe to carry around cash. Opening a checking and savings account with your teenager is not only a safer way for them to manage their money, but gives them a little more independence and education on balancing accounts.

4) Encourage Savings

It is recommended that 20% of everything a person earns should be put in savings. Teach this saving tip early so it continues through adulthood. When opening up accounts, encourage your teenager to put 20% of each paycheck into their savings account.

5) Let them Buy a Car

Buying a car is a huge decision, but a great incentive for saving. If your teenagers know they want a car and they have to buy it, it will give them more incentive to put that 20% in their savings account each paycheck. Not only does this teach financial savings, but it also teaches teenagers the value of money, and how much work it takes to actually buy a car.

6) Have them Pay Insurance

Another way to build financial independence is to have your teenager pay their own car insurance. Car insurance for a teenager is expensive, so it may be best to keep them on your policy and allow them to pay the discounted price.

7) Have them Buy Essentials

You provide everything for your child while they are young, but as they get into their teen years, it is important to make them start buying things on their own. Instead of buying five name brand pair of jeans at the beginning of the school year, set a budget that you will pay for their clothes, and if they want extra, make them pay for it themselves.

Teaching a teenager to be more financially independent isn’t going to happen in a few days. Gradually build your teenagers responsibilities as they get older starting from their earlier teens. The earlier you start this transition, the better equipped for life your teen will be when they reach 18.

 

Comments

  1. When our children were teens, our attorney advised us to NEVER add our teens to our auto insurance. He said that statistically, teens have more accidents than any other age group. If they are on your auto insurance, and have a wreck, and injure someone then who ever they injured can come to YOU for reimbursement of medical bills, pain and suffering, etc. The attorney said most teens have no assets, or very little assets, so there is nothing to get if they are sued. If you are sued, however, you have savings, your house, and other assets that can be taken. So, we bought cars for the girls that could be paid for outright, put the title in their name, and insured them on separate insurance policies in just their name. It’s something to think about.

  2. My child is not quite a teenager yet. and a lot of these tips makes sense, especially that one about letting them buy a car. I’m not too sure about charging them for rent, though. I’m not comfortable doing it.

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