Once you speak with teenagers about the topic of money, you’ll soon realize that they believe they’re experts on financial topics. Being teens, they know people go to work to earn money and that you need money to purchase things and pay your bills. If your teen has figured out this basic fact on money, they’re already on the right track to managing money.
However, considering the tough times we’re going through, being able to manage your money effectively whilst at college is a necessity for students. To become financially literate, you need to get a grasp on personal finance lessons first. Keep reading to know more.
1. Exercise self-control
If your parents already taught you this skill, you’re lucky enough but if they didn’t, you have to master the art of self-control. If you have a habit of buying all your things on credit cards, no matter whether you make payments or not, you will probably continue making payments on your cards for the next 10 years. So, you have to know what is necessary and what is not. Know the importance of a healthy credit history.
2. Know the future of your money
You should learn how to handle your finances, as not doing so will lead to a situation where others will handle it on your behalf. If you hire financial planners, they might be dreadful people trying to make money from you. So, get hold of the best books on teen personal finance and increase your knowledge before jumpstarting into handling your own finances.
3. Understand where your money goes
Now that you’re done with reading the best books on personal finance, you’ll know how crucial it is to keep a check on your expenditures. Your expenses should never surpass your income. The best method of keeping a check is by following a budget. Once you figure out your monthly income, you’ll know how much to spend so as to save money. A smart person always ensures his/her expenditure after savings from his/her income.
It’s never too early to save for retirement
Even though you may not be interested in the basics of stock market during your teen years, you should still know the importance of saving for retirement. In case you’re thinking that it’s too early to save for retirement, you’re wrong. The way in which compound interest functions, the sooner you start saving, the less principle you’ll have to pay while getting funds. Hence, teenage is the best time to start saving money.
4. Protect your wealth
Are you interested in making sure that your hard-earned money doesn’t vanish in the near future? If yes, get disability income insurance as it safeguards all your important assets that possess the ability to generate wealth in case you ever become disabled due to an injury or an illness. Also know how to guard your money from taxes. Start building a pension plan that can help you fight inflation.
We all love teenagers and we want to assist them in becoming financially independent individuals. So, one of the necessary steps that you can take as a parent is teach them the valuable lessons of personal finance.