Recently, Georgia became the country’s 13th state make personal finance education mandatory for high school students. According to Next Generation Personal FinanceGeorgia joins Alabama, Florida, Iowa, Mississippi, Missouri, Nebraska, North Carolina, Rhode Island, Ohio, Tennessee, Utah and Virginia in requiring teens to to take at least one semester of personal finance before can graduate.
While this The growing trend of states requiring basic financial literacy to be taught in high school is encouraging, it still means that only “35% of students in the United States will have access to a financial literacy course.” according to CNBC. A the majority of children and adolescents will continue need to get that education elsewhere.
Since money management is not traditionally taught in schools, the responsibility lies with parents. In addition to what we have already written about what to teach your child about money at any agehere are some basic financial skills every teen should know before they graduate from high school.
Every teenager should learn how to budget realistically. Teach them (with your own statements) how to collect financial documents such as W-2 forms and pay stubs, utility bills, credit card statements, receipts and all other financial documents relevant to their (future) income and expenditure. After creating a list of monthly expenses, they must know how to break them down into fixed and variable expenses. Teach them how to compare their total income to expenses, so they can either make a savings plan for their remaining monthly income or figure out where to cut expenses so they don’t live beyond their means.
Children and teens should learn to compare prices, considering the price, volume and quantity of products such as groceries, personal hygiene items, toys, sports equipment and other accessories whether in the aisles of your local Stop ‘n Shop. , or on Amazon. Take them shopping and tell your own process of evaluating and finding the best value. Or give them a sum of money and a shopping list and challenge them to buy your family’s weekly necessities with those limited funds.
Economic DIY Skills
Being able to do basic household chores can save you a pretty penny. Parents should actively teach children how to do laundry, plan their weekly meals, mend and hem clothes, cook, clean, unclog the toilet or drain, and perform basic car maintenance, such as changing the oil or replacing an air filter. They will be able to save money otherwise they would have spent on tailors, maid services, takeaways, and mechanics.
How to Split a Bill (and Calculate Tips)
Everyone should know how to split a restaurant bill and tip servers appropriately. Teach your kids to add tax and a bit more tip than usual to their amount (to cover their party members who will inevitably miscalculate). Also teach them that group payment philosophies differ. Some believe that all group meal purchases should be divided equally by the number of diners, no matter who ate whatwhile others will calculate specifically for what they ate and drank. Kids must be prepared for both scenariosand know how to quickly calculate a 15 -20% free.
The importance of good credit
While the credit card industry would have our children believe that credit and purchasing power are free and plentiful and perpetually available, it is our job to teach them that this is not the case. Help them get the importance of having less credit cards and pay them full invoices and on time and understand how much they will pay in interest to carry over balances from month to month. (This is where you illustrate how easy it is to get into debt and how long it can take to pay it off.) benefits of a high credit score—lower interest rates on mortgages, more likely approval of home rentals, and better car insurance rates.
How to set short and long term savings goals
Help your child or teen set short-term and long-term savings goals. This can start at a young age, asking your child to find a toy they want and challenging them to save a few dollars from their allowance each week or month to buy it themselves. Praise progress and keep it visual, as financial advisor Rachel Stewart said Paternal, “either keeping the money in a transparent container or showing your child their bank statement”. Being able to see their money pile up is a big motivator.
As you get older, work with your teen to establish a long-term savings goal, such as a car, and help them understand how to change their budget, savings, and income to meet that goal.
Investing can be daunting, even for the elderly. Expose your child to the power of investing and the time value of money, either through a basic investment categoryan application such as green light or allowing them to invest a small amount of money in a deposit account.