Nearly all parents enjoy teaching their kids practical lessons such as tying shoes, riding a bike, and driving a car. But when it comes to basic financial lessons, many don't seem to get it right. And this is a very costly mistake. Teaching your teen about finances is crucial.
Studies show that only 22 states expect high schools to teach financial literacy. That means most children learn about money for the first time at home. Without their right foundation, most of them are more likely to miss out.
Financial experts often say that kids who speak with their parents about money develop better financial skills than those who don't. Unfortunately, most families don't have money conversations because they're embarrassed about their fears, lack of knowledge, poor financial habits, or their current financial situation.
But if you want your kids to do better than you, you must overcome your fears. We want to help you do that. In this blog post, we share four financial lessons to pass on to your teen before they leave the nest.
Resist Instant Gratification
There is a huge difference between needs and wants. Teens who understand this difference can easily learn to make smart financial decisions. So teach your kid about them.
Most teenagers find it hard to accept that they don't need sneakers worth $250 or that video game. They're so focused on having them feel good right now that they don't see the financial implication.
When confronted with such a situation, teach your kid to delay their gratification. It won't be easy but the impact is huge. When they finally learn the value of money, and to distinguish wants versus needs, they will make smart financial decisions now and in the future.
Invest In Your Future Before Spending
Once your teen understands and appreciates the benefits of living below their means, advise them to develop the habit of investing in their future before spending. Whether they're starting their first job or getting that first allowance, show them the rewards of saving money for the future.
If you feel uncomfortable about your current financial situation, use it to your advantage. Show them what you could have saved if you developed that habit earlier and how that has impacted your life. But don't stop there.
Mention someone you know who started saving early. It could be a family friend, a relative, or a successful entrepreneur in your neighborhood. If your teenager learns to spend before investing in their future, they may never achieve long-term financial goals, like saving for their first home, buying a car, and even college.
Start Saving For Retirement Early
For teens, retirement seems so far off for teens that it doesn't feel real. But what they don't realize is that years slip by pretty fast. And it becomes more difficult to build a sizeable nest egg when you have other expenses such as family and mortgage.
Therefore, encourage your teen to start saving for retirement as early as possible. Teach them not to wait until they earn a lot of money. Show them that when they save early, they will have a pleasant and exciting retirement than most folks.
We all know that our kids will grow up and leave the nest someday. And now, you know that teaching them to be disciplined financially before they move out is extremely important. Use these lessons to prepare your teen to face the real world with confidence.