By the time your children are in their teens, they should understand how much basic things cost. A great way to teach this is to hand them a small grocery list and ask that they go to the store to get the items. When they ask for money, ask them how much cash they’ll need. Force them to make an estimation and then help if needed. Teens should also know how to earn money and how to save money. Here are a few teaching tips to help get teens ready for independent life!
Savings account. Teach your children that adults use the bank to save money. Take them to the bank so they can watch the process of opening an account. Studies show that children with savings accounts have less stress and more hope for the future.
Checking account. Teens should learn to write checks, balance the checkbook and use a debit card. Make sure to have two separate accounts; don't give a checkbook or debit card on the savings account!
Learn about credit. Seniors in high school may be ready for their first credit card. Prepaid credit cards are a good alternative to regular credit cards for teens and can serve as their “training wheels” to ease them into using credit wisely. Low-limit credit cards are another alternative. Parents co-sign with their teen on these cards and set a low credit limit of $200 to $300.
Teens can take work-from-home to a new level. Encourage them to start their own lawn mowing or babysitting service. Help them organize a family yard sale and let them keep the earnings.
College savings. I love the idea of matching contributions. If you are financially able, continue to match your teen's earnings in their college savings account.