Teens and Money: How to Manage Both

I would like you to raise your hand if you ever heard while growing up "you are going to wish you listened to me when you get older?". I know my both my hands are flying in the air when I asked myself this question. Hind site however, is 20/20 as you get older, and I wished I listened to my parents and other elders advice when I was younger, especially when it came to money. Maybe if I did then I wouldn't have ever gotten into debt when I was just starting out and I would of known how to manage my money a whole lot better, however, I guess with my experience in bad money management when I was younger has given me some great tips now on how to manage money better and the tips I am going to give below are the tips, if I were a teen, would make me open my eyes and listen a little better!

These tips below are great for teens who have a part time job, or even earning an allowance. Just sit down and explain to your teenager these tips, and before you blow off the deep end with a parents temper, remember they are kids and the value of money to them still has not come into full force yet. You have to teach that to them first!

Money Managing Tip 1
Allow your teen to gather at least 4 paychecks before you head down to the bank to start a checking and or savings account. During this period still pay for all your child's needs. Do not have them start doing for themselves right out the bat. They need a little cushion before getting started.

Money Managing Tip 2
Once your teen has about $400 to $500, take them down to the bank (of your choice) and sign them up for a checking account and a savings account. Most banks require you to have a minimum deposits of $200 in each one before opening one. So for example lets say your teen has $400, start a checking account with $200 and a savings account with the other $200.

Money Managing Tip 3
The following two paychecks after he or she has opened both a checking and savings account, tell them to deposit a quarter of the check into the savings account and the rest into the checking account. For example, if your teen gets paid $100 a paycheck, then for the next two paychecks have him or her take $25 of each paycheck and put it in the savings account and the other $75 in the checking account. This will start your teen learning how to save their money, but still feel like they are having their own money to spend.

Money Managing Tip 4
Now that your teen has a good savings account started and plenty of money in their checking account, let them start paying only one bill of theirs. I say one because if you through to much at them, it will make them feel overwhelmed and right now we are trying to build up money managing confidence and not feeling like at the age of 16 that they need to either take out a loan, get a credit card, or either get a second job.

My best advise would have them pay either their cell phone, or car insurance bill. If their cell phone is a bit on the expensive side, tell them that from here on out it is their responsibility to pay it. If it does not get paid then they no longer will have the luxury of having a cell phone. If they have a high bill, sit down with them before letting them take it over and look at other plans the cell phone company has out there so they can have a lower monthly payment.

Money Managing Tip 5
After about three to five months of paying their own bill and making sure they are paying it on time, and having the money to do so, ask them if they have enough money left over at the end of the month to start paying for gas in their vehicle. Since gas goes up and down, you can never average a weekly amount of money that will go for gas, so ask your teen to make sure they have at least $20 in their checking account for the initial week, and additional $20 for extra running around. Allow them to do this for the next month or two.

Money Managing Tip 6
If you are seeing your child is doing great with money, allow him or her to pick up a second bill, or start buying their own personal item needs. Have them go to the store and on a week to week basis have them calculate what they would buy and what they would spend. Now work this into their budget to see if they have enough money left over each week to pay their bills. Stress to them that paying their bills on time first is more important then getting that extra bottle of shampoo or the most expensive kind.

Money Managing Tip 7
After a year of good money managing by your teen, it is time to introduce the credit card. I wish my parents would of gave me practice on this because the credit cards are what get everyone in trouble. I will not tell you that he or she won't ever get one, because truth of the matter, when your teen gets older, and they receive that first credit card acceptance letter in the mail, they will more then likely fill it out and send it in! So it is better to start now with teaching them how to use one before it is to late and they are sitting in thousands of dollars of debt.

There is many credit cards out there that are prepaid credit cards. Just do a goggle search for prepaid credit cards and sift through the ones out there. Make sure you find one that does not have a minimum balance required or any annual fees included in it.

Now once they have their paychecks established, have them put $20 a week into the credit card balance. After they get their credit card balance up to at least $100, then let them start using it, however, tell them once they use the card, they must pay off what they just charged before using it again. So tell them the best time to use it would be close to pay day so they will have the money, and they will not have to dip into their checking account or savings account to pay it off!

If you would like any more information visit http://www.banknbsb.com/teens08%20Vol%203.pdf for some other great money managing tips for your teenager. There is also a list of books out there for you to get for your teen to help them understand money better and that list is all on that site! However, my best tip for you when it comes to helping your teen manage their money is to teach them what you wished you were taught about money! Speak from your heart to them and treat them like an adult!