4 financial independence tips to talk about with your teen.
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Watching your kids grow up, you want them to be free and have fun while they’re young. At some point, it’s a good idea to sit down with them and have a talk about what it means to be financially independent.
This talk doesn’t need to scare them about the real world or push them to grow up, but making them aware of what is to come and how they can start setting up a better future for themselves is the first step to a healthy financial future.
Whether you’re a mom of five and have some experience or are about to welcome your newborn, it’s important to know where you can go to find helpful parenting tips.
Look for a job
Depending on what age you decide to talk to your child about financial independence, they may not be ready for a job just yet. However, they should know why you need a job and how to get one. Even something small like helping them create their resume or doing a mock interview so they can practice will set them up for success when they’re ready to job hunt.
A steady income stream also provides your child with spending money and an opportunity to practice managing their independence safely at home.
Budgeting looks different for everyone. You can create a spreadsheet, use a folder with monopoly money or even just take a mental note of how much you’re spending on each expense. The important thing to know is how to do it properly.
Your child should know how much money they need for necessities and savings, and how much they can spend having fun with their friends so they’ll understand how to budget when they grow up and have their own families.
A simple way you can start the habit of budgeting is by giving them a set amount of monopoly money each week. Every month, have them set aside a portion of that money for their rent, gas money, car maintenance, etc. What they have left is money they can decide to save or trade-in for real money they can spend to have fun with friends.
Speaking of saving, it is never too early to start saving for the future. Saving will help you tremendously if you ever need to get out of debt. In 2021, the average American had $5,525 in credit card debt. Even more surprising, is that Gen Z adults already have $2,312 in debt.
Saving doesn’t require thousands of dollars, even putting five or ten dollars away every month can go a long way. The popular 50/30/20 budgeting method recommends saving 20 percent of your income each check, but you can customize it to your budgeting needs.
It’s good to consider savings an extra expense you budget for. Rather than telling yourself you’ll save what you have left from the month, put an amount of savings away right as you receive your paycheck and spend the rest.
Apply for scholarships
It can be overwhelming for kids to enter adulthood and decide whether or not to attend college, what college, and what they’ll study. They can even forget scholarships exist. Applying for scholarships doesn’t have to be stressful and it’s not just for people with perfect grades. Even utilizing Federal Student Aid can help your child avoid debt.
Scholarships can help you and your child in a multitude of ways such as:
- Avoiding debt
- Securing housing on campus
- Allowing them to focus on their education
- Makes their resume stand out
- Provides opportunities to grow connections
To find out more about scholarships, guidance counselors or college admissions offices are amazing resources that are more than willing to help. You can even find plenty of information online through financial aid websites.
While it’s great to watch your kid be a kid, it’s never too early to start educating them on the importance of financial independence. The more they know, the better they will be prepared for when it’s their turn to utilize their knowledge in the real world.