It’s never too early for a person to become financially literate. This means that they have a grasp of how to save and invest money to protect themselves as they get older. Teens can definitely learn about personal finance and take the lessons they learn with them throughout their lives. This will help them with resilience during tough financial times and ensure that they will be less likely to have a financial crisis later in life.
There are some basic principles that they should be taught. They should also be taught as simply as possible and then steadily get more complex ideas across to them. This way they can grasp the concepts of certain things before they move on so they have a greater understanding. In this article, we will go over several ways to teach them how to manage their finances.
How to be Frugal
Being frugal is one of the most important lessons a teen can learn. There is a difference between putting money away to save and being frugal overall. This means that they have to understand spending behavior and how to save money. They will understand that they shouldn’t spend unnecessarily.
One of the biggest lessons for frugality is to be always on the lookout for deals and offers. For instance, when they are getting their first car they should be researching the cheapest car insurance Hawaii has available for them so they aren’t overspending.
Buying clothes is best done at certain times when there are sales happening instead of on a whim. They should also be looking into buying clothes secondhand to save even more money.
The concept of being frugal and avoiding spending money because they are bored stressed, or otherwise in an emotional state is one of the most important for them to understand so they don’t have problems with cash flow when they’re older.
How to Put Money Away
Saving money is the most obvious byproduct of being frugal. What you do with that money is important. Saving money so you have more to spend on other things is not the point. The point is to be able to save money by spending less and putting the remainder away.
They should dedicate themselves to putting a certain amount of money or a percentage of their money away every week.
Learn How to Budget
To be able to put money away they need to be disciplined with their money and spending. This means that budgeting is an important lesson. They should be taught to take a month and record all of their spending and earnings. They should understand how much they make and what they are spending their money on.
This will show them the areas of their spending that they should cut out and put that money into a savings account or certificate of deposit. They should have a nice cushion for emergencies like car repairs and other expenses. Then, they can start focusing on the harder lessons like investing.