Financial Skills Every Teenager Should Have Before Graduation
As high school graduation approaches, it’s essential to equip teenagers with the financial skills they’ll need for life beyond the classroom. Whether they’re heading to college, joining the military, or entering the workforce, these foundational skills will set them up for success.
Setting Up (and Balancing) a Checking Account
Introduce your teenager to the basics of managing a checking account. Encourage them to explore money management apps that can simplify this process and track their spending habits.
Budgeting and Financial Goal Setting
Graduating seniors will benefit from understanding the importance of budgeting and setting financial goals. Help them understand the significance of prioritizing expenses and saving for both short-term and long-term objectives.
Establishing Credit Responsibly
Guide your teenager in building a positive credit history and using credit cards responsibly. Emphasize the importance of paying bills on time and maintaining a low credit utilization ratio.
Understanding Loans
Knowing the implications of taking out loans is beneficial for anyone. Help your teenager understand important concepts like interest rates, terms for repayment, and the overall long-term financial impact borrowing may have on them.
Insurance Literacy
In addition to loans, it’s also vital for graduating seniors to understand the different types of insurance, including health, car, or even renters insurance. One of the biggest takeaways is recognizing how insurance coverage can protect them against unexpected future financial burdens.
Starting Retirement Savings
Emphasize the power of compounding and how even small contributions made during teenage years can lead to significant growth over time.
Tax Awareness
Educate your teenager about the basics of paying taxes, including understanding different types of taxes and how they are calculated.
Introduction to Investing
Introduce the fundamentals of investing, such as stocks, bonds, and mutual funds. Encourage them to explore the concept of risk and return and the importance of diversification.
You can review this list with your child and make a plan to help them learn any of the skills they don’t have yet. By learning these skills early they will start off their adult financial life on the right path.
