This week's Funding Our Future segment features tips for setting teens up for their best financial life. Cyprus Credit Union's VP of Marketing, David Sant, shares the following suggestions.
It's all about teaching financial responsibility and giving financial independence, while still being involved.
Teach them to budget and manage financial responsibilities
• Make sure they understand that everything isn`t free, you need to work and budget for expenses.
• For example, let`s say your teen turned 16 and wants a car.
o Decide what you will cover and what they will be responsible for. Parents may cover insurance and major repairs, but teen will cover gas and routine maintenance.
o Over time, increase their responsibility
• If they have a job, identify expenses, needs, and wants then build a budget to meet these three categories.
• Balance spending and savings
o We`ve seen that young kids are often better at saving and adults can be better at spending, teen years are a vital time to teach the balance between the two.
Start understanding and building credit
• Enroll in financial literacy courses (in person or online) to tech teens about credit and why it is important
• When you feel they are ready, consider opening a Teen Visa Account
o Parent co-signs
o Very low limits, low interest rates
o Card control apps can help you monitor and control card spending
• Add them as co-borrowers on your loans
Allow them to make mistakes
• Often our instincts are to jump in and prevent these mistakes from happening,
• Don`t let them make major mistakes with lasting impact
• Making small financial mistakes can be great lessons and help teens avoid major mistakes down the road
• For example, if your teen wants to go to a concert and decides to buy tickets instead of budgeting for gas, let the car be parked until they have gas money and let them learn the importance of budgeting and prioritization of needs vs wants.
To find more helpful tips, go to cypruscu.com.