Tips for Teaching Young Adults About Finances

One of the biggest problems facing parents is that they need to teach their children about finance. This can be a tricky subject to approach, but a necessary one. This guide is going to provide you with five tips on how to teach your 18-year-old how to manage money.

Lead by Example

The first step is to lead by example. You will struggle to teach your child anything about finance if you don’t practice what you preach. Lead by example by practicing good financial habits. Live within your means and ensure that the bills are paid every month. And don’t bow to temptation by refusing to say ‘no’ when your teenager asks you for a new video game or iPhone.

Show Them How it Works

General tips are helpful, but they represent only the tip of the iceberg. You must be able to go further than this by giving them practical experience. Don’t hide your bills. Show them exactly what you pay for every single month and demonstrate how involved the process is.

Try to link everything back to something they see and use. For example, take your Cigna dental insurance and medical insurance bills and show your teenager how much you pay and how you budget to pay those bills every month. Give them a sense of how it all works.

Teach them the Value of Money

You’ll find it tough to teach anyone about finance if they don’t value money. Young people are used to someone else paying for everything. They don’t understand that someone has to work hard for that money and there’s not an endless stream of it.

Teach your teen the value of money by making them work for it. This could come in the form of a part-time job or it could involve doing chores in exchange for that money.

Learning about Debt 

Debt offers many hard lessons. Don’t let them learn those hard lessons when they get older and they have bills of their own to take care of. At this stage in their lives, they’ll begin to receive various credit card offers and they’ll want to join their friends in putting some plastic in their wallets.
Teach them about how debt works and make it clear that this money has to be paid back at some point. Sit them down and show them the mathematics of it all until they understand that debt is a double-edged sword.

Give them Financial Responsibility

When you believe they’re ready it’s time to provide them with some financial responsibility. For example, you may decide to give them a sum of money every month and they have to survive on that money. If they have a part-time job you may even want to ask them to pay for their cell phone bill.

Giving them bills to pay and money to earn puts some adult responsibility on their shoulders, and this can be an invaluable teaching experience in the long-term.

Conclusion – Do You Believe in Financial Responsibility?

It’s important to give teens all the characteristics they need to succeed in life. Financial responsibility is one of these things. What do you think is the most important financial lesson you can give to an 18-year-old?

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