Your child’s teenage years are a great time to help them build strong money management skills. At BECU we’re here to help – with ideas about activities you can do together, tools to help them start building a banking and credit history and tips on helping direct them to make sound financial decisions.
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Create a household budget together
A great way to start helping your teen build her or his money-management muscle is with a real-life budgeting exercise based on your household costs. The downloadable BECU Budget Planner helps bring budgeting to life. You can talk about the difference of fixed expenses, like rent or mortgage, and variable expenses, like groceries and clothing. You can compare costs to actual income, if you'd like. Even if you're just listing where money goes each month, your teen will see the realities of a budget first-hand, and learn how tradeoffs and choices are an important part of staying in control of your finances.
Set goals together
Another great topic to explore together is goal-setting. Support your teen in thinking about what he or she wants to accomplish in the short and long-term—both personally and financially. Start by talking about the difference between short-term and longer-term goals. A short-term goal (less than 2 years) might be savings-focused, like “having a down payment for a car.” A medium-term goal (2-5 years) might be educational, like “save for college” A long-term goal (5 years+) might be work-related, like “have a job as a CPA.” Once they've identified goals, you can start talking about the steps necessary to reach them. An important step, regardless of the goal, is staying on top of their finances.
Teach them how to shop smart
This is a great time to introduce the concept of comparison shopping, since you've already talked about choices being an important part of budgeting. Get a local Sunday paper and clip out ads – or check it out online. Compare prices of similar items, and talk about why the same product may be priced differently in different stores. Also visit comparison shopping sites like Pricegrabber. Your teen will begin to see how shopping around can really pay off.
Use junk mail to learn about credit cards
Sure, they may be annoying but that trove of credit card offers you get in the mail is also an excellent teaching tool. Look for the interest rate; see if it's promotional. If so, check the details to see what rate it will convert to. Is there an annual fee? What about other enticing perks? Discuss the grace period, too, It's a great way to talk with your teen about using credit cards responsibly – and about having a plan to pay off anything you buy on credit. You can also play out purchase scenarios together, like buying a laptop on credit. If you make the minimum payment, how long will it take to pay off the computer? What will the total cost be, given the interest accrued over time?
Happy 13th birthday – from BECU
While some people may feel mobile banking and debit cards are just for adults, they're actually great tools to help teens learn to manage their money. Especially since it's the way they'll have to handle their finances once they're on their own. When they turn 13, your teen can have access to this exciting new world through their BECU checking account. They can begin using BECU Online Banking, download the BECU Mobile App, and start receiving monthly e-statements. This is in addition to the debit card all members can have, starting at age 8.
As a parent, it may seem like a lot of freedom and responsibility for someone so young, but think of this as their financial training ground. They'll be learning how to spend responsibly while still under your roof And remember: as their parent of guardian, you can monitor their bank account and set ATM limits, while allowing them some freedom to make decisions on their own.
Reinforce “save, share, spend”
It's helpful to set up systems for your kids that support positive financial habits, and it's easier than ever at BECU. If you like the philosophy of “save, share, spend”, consider supplementing your teen's checking account with two savings accounts.
With an Early Saver account, designed especially for our members 17 and under, teens can get in the habit saving money and learn the value of “paying yourself first”. You might consider encouraging them to save 10-15% of any income or allowance they receive.
With a secondary savings or “share” account, teens can learn the joy of helping others by setting aside money specifically for charitable purposes. If they're looking for some ways to make a difference, check out sites like Me to We and The Giraffe Heroes Project.
Relate “real-world” borrowing and lending to their world
Even though they may not realize it, your kid already knows about borrowing and lending. Help them see the similarities between something like lending a friend lunch money or borrowing sports equipment —and real-world financial transactions of taking out a loan. You can talk with them about the risk a lender undertakes — and also help them understand the importance of being credit-worthy as a borrower.
As your teen's knowledge grows, so will their confidence. By taking steps to help them learn now, you're giving them a good basis for building their money management skills on their road to financial independence.
Helpful Resources
This is for informational purposes only and is not intended to provide legal or tax advice regarding your situation. For legal or tax advice, please consult your attorney and/or accountant. Investments are not federally insured, not subject to credit union or affiliate guarantee, and may lose value.