Few things are more dangerous than a teenager with a credit card. The truth is many teens simply don’t know how to budget their finances and spend money wisely. They have never been taught the value of a dollar. While teens learn some financing information in school, you can’t assume that they have been taught all of the essentials. Incorporating good financial lessons in your parenting can make all of the difference when it comes to teaching your teenager how to budget. Here are a few ways that you can monitor your child’s spending, and help them to become knowledgeable in their finances.
1. Give Your Teen a Prepaid Card
Believe it or not, it isn’t impossible for your teen to get ahold of a credit card. This can spell disaster for a teen who doesn’t know the repercussions of charging up a hefty balance. A prepaid card for teens allows the parent to load the card with money their child can spend. By loading their allowance on the card, you can monitor your child’s spending habits. The limited funds attached to the card will ensure that your child does not overspend. Your teen can use the funds on gas, movies, or anywhere else a credit card is accepted. Plus, there are no interest fees involved.
2. Give Your Teen an Allowance
A great way to teach your child about saving up their money is by giving them an allowance. Teenagers often get into the habit of asking their parents for money in order to buy anything they desire. You can put a stop to this by organizing a set allowance to be paid at the same recurring date. Don’t give your teen any money other than their weekly or monthly allowance. If they need or want anything, they will be responsible for buying it themselves with their saved allowance money. For instance, you may supply all of your child’s clothes, shoes, and other necessities, but if they want to go to the movies or purchase a new tablet they will need to use their own money for those things. Try loading the allowance money on a prepaid debit card.
3. Monitor Their Spending
When your teen is using a prepaid card, it is easy to monitor what they are spending their money on. Since you are supplying the allowance, you have the right to know where the money is going. Monitoring your child’s spending habits may seem like an infringement on privacy to some; however, it is crucial that you know what you child is buying so that you can guide their spending habits and recommend alternative choices.
4. Establish Open Communication
Make sure your teen feels comfortable discussing important financial decisions with you. By giving them a prepaid card, your child will know that you are monitoring their spending habits. This may make them more inclined to be honest about their spending habits. They will also know that you trust them with the great responsibility of money.
Teaching your teen how to be successful with their finances may be one of the most important lessons that you can instill in them. The art of budgeting is something they will use for the rest of their lives.
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