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If you have a teenager who doesn’t quite understand how important good financial habits are, it’s time to teach them! Giving your child the building blocks on saving, budgeting and understanding debt will help make them into responsible adults. Here’s some financial literacy 101 for your teenager. 

Bank Accounts 

Explaining the different types of bank accounts to your child is crucial. Start by opening a savings account with them so they can understand the importance of saving. When they have a job, you could also work with them to open a checking account. This will help teach them the process of saving, spending money, using a debit card and writing checks. 

Credit Cards 

Even though your teen won’t have a credit card at that age, it’s important to teach them about credit cards and how they work. Explain the limits that are set, paying your minimum each month and how that will affect their credit score. This will help them be prepared for when they do get their first card. 

Debt 

Teach your teen that debt is no joke. There will be car payments, groceries, entertainment purchases, credit card bills, student loans and so on. Making sure they know not to bite off more than they can afford is extremely important. This will help them understand all of the bills they will have to afford in the future. 

Credit Score 

Start explaining what a credit score is and how that will help them get lower interest rates in the future. This can also tie into the credit card conversation. Understanding the basics of a credit score now will help keep them out of trouble in the future. 

Budget 

Understanding needs vs wants is a great life lesson. Start your teen off with budgeting by having them help with the grocery list. Tell them the rough prices of what things cost, have them make a list and keep it under a certain amount. This will help teach them how to budget, so they can apply it to other things in their life down the road. 

These basic items are critical for teens to understand. Looking back, you may realize you didn’t quite know all of these things when you were a teen. This is why we wanted to share this information, as we believe it’s a good thing to get ahead in the financial world with your child, so they are prepared.