Preparing teenagers for the day that they move out is not easy – they have to learn about finances, how to look after a house and generally what it’s like to be an adult. One of the ways that you can start out on the journey is to introduce them to some money tips for teens that will help them to understand the value and importance of money for later in life. If you’re stuck and would like to know exactly what to teach them, read on for my 7 Top Money Tips for Teens.
1. Start Saving at a Young Age
As a teenager it can be easy to think about putting off saving money. When your financial income is limited, you will want to spend every penny that you have on the latest CD or pair of jeans; however if you were to save money from a young age, you could build up some real cash for when you’re older.
An example is this: if you save 78p a day when you are 13, increasing that to £4.47 a day when you are 25 and then £27 a day when you are 29, by the time you are 30 you will have a huge £10,000 cash in the bank to spend! If you manage to save more money from a young age, that £10k can build up even higher.
2. Are You Getting the Best Deal?
One of the money tips for teens that is often overlooked is realizing that you should always find the best deal. If you purchase a CD in a shop for £10 that you could find online for £6, you are wasting £4 – that could be over an hour’s work that you have to do to pay the difference.
3. Turn down Credit Cards and Overdrafts
Once you turn 18 you will be bombarded with marketing that encourages you to get a credit card or overdraft. Although the idea of having seemingly unlimited money to spend may be appealing at the time, the huge interest rates that you will incur if you are unable to pay the balance off will cripple you financially.
Top money tip: If you are going to get a credit card or overdraft on your bank account, make sure that you are in steady employment and have the means to pay off what you owe.
4. Consider the ‘minimum Payments’
If you think that money lenders want you to pay them back, you are wrong. They want you to borrow from them for as long as possible so that you build up interest on what you owe – that is why they introduce ‘minimum payment’ schemes, where you are unable to pay off more than your monthly instalment.
5. Think about Your Pension
I know what you’re thinking: why on earth should I consider my pension as a teenager? Well the reason is simple: prior planning will lead you to have more money to fall back on when you are older. Investing small amounts into a pension plan can build up over time, so that when you hit retirement age you have a nice nest egg to fall back on. Of all the top money tips for teens, pensions is usually a subject oft overlooked.
6. Insurance Excesses
Learning about insurance is one of the money tips for teens that is paramount. Insurance can be taken out on everything: cars, homes, lives, pets, the list is endless. However if you are not aware of the insurance excess rate, you may find yourself financially stuck. The excess is how much the insurance company expects you to pay towards the total cost – basically the amount that you have to pay before receiving a penny from your insurance provider. Check the small print!
7. Consider the Risk Carefully
Investing your money can be a great way to make some cash. Instead of having your money sitting in a low-interest bank savings account, you may want to invest your money in shares or even items of value (such as gold bars) depending on the amount you have to save. Always check with financial advisers before opting to invest your money, as the risks should always be carefully considered.
I hope you’ve enjoyed reading my list of 7 Top Money Tips for Teens and have found the points useful. Finding suitable money tips for teens to learn can be difficult and even frustrating, but you are doing the best thing you can; helping to prepare them for life as an independent adult. Please leave a comment if you have any additional tips or would like to share your experience teaching teenagers about money!
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