Does Your Teen Need a Financial Reality Check?
Is your teenager in need of a financial education? If your child is like most American teens, the answer is yes. For many years, young adults have had to file for bankruptcy largely due to overwhelming debt from credit cards, student loans and extravagant purchases. This certainly isn’t the path they desire, but while teenagers want to achieve financial success, they lack the early guidance needed to avoid pitfalls.
Many teens look forward to attaining financial independence and believe they’ll be able to do that by securing a six-figure job shortly after graduating from college. While this is their belief, or perhaps a dream, often teens don’t take time to appreciate the factors they need to learn in order to assume this responsibility.
Very few teenagers are taught how to budget their money, and even smaller percentages know how to pay bills or pay down debt as they build savings. The lack of understanding regarding these basic building blocks of personal finance underscores the need to educate teens. This means spending time with your teens to help them understand how to plan, the need to have a budget and manage it, and the long-term value of building and maintaining solid credit. Here are three ways you can start getting your teen more involved to help them learn the basics.
- Lead by example.Take time to show them how them how you effectively manage money and the family budget.
- Encourage attainable goals.Set an expectation and goal for your teenager to manage the family budget for a period of time to obtain additional savings. Reward the success by allocating a percentage of the savings in an account for your teen.
- Be honest.Share your financial mistakes and consequences with your children. Being honest with your teen can build a level of respect for you as a parent – and lend credibility to the lesson you are sharing.
Although there is nothing wrong with an optimistic outlook toward their financial future, it is extremely important for today's youth to be prepared and understand the complex financial decisions that will affect them for a lifetime.
Parents should play an active role in ensuring their children's financial maturity. Financially educate your teens early so they can have a “blueprint” to success. For more information about our financial solutions or other ways Univest can help in the financial literacy educational process, please visit www.univest.net/financialtips.
Univest Bank and Trust Co. is Member FDIC.