Teenagers tend to think that they know everything already, and often consider their parents to be clueless about what really matters to them. Such erroneous beliefs are not true, since parents are well aware of the dangers of poor financial decisions. Parents can and should teach their teenagers quite a bit about money and how to use it well.



Parents have experience on their side. They have dealt with money and the ups and downs that come with it. Parents can lend insight to teenagers about how to make and manage money. From day one, they can set teenagers on the right track to understanding the advantages money and good credit can bring into their lives. Here are some tips.

1. Open a savings account. As soon as a teenager begins making income from any sort of job, take them to a bank to start putting their money into a savings account. Encouraging teenagers to leave any money they make in the bank for a month before using it will help them save up moderately large amounts of money that would otherwise be squandered away in no time at all and on nothing of any importance. Though it won't be easy to get teenagers to stick to such a plan, it will be a great financial lesson for them.

2. Invest in a certificate of deposit. When your teenager has accumulated around $500, have them put the money in a CD. The longer you keep the money in a CD, the higher the interest rate will be for you. Try a one-year certificate. After a year, you can sit down with them and decide what to do with the money.

3. Don't make rash decisions. Request that teenagers not make sudden purchases on things they think they really want before sleeping on it for at least one night. Making rash decisions often brings buyer's remorse, something most parents are familiar with. Applying this "No Sudden Purchases" rule, teenagers will be saved from experiencing such remorse. For example, you could explain to a teenager that instead of buying a scooter today, being a little patient and saving money could score them a motorcycle

4. Develop a financial plan. Adults are told to come up with a budget for their family, but teenagers can benefit from a similar plan. Get them to list their wants and needs in two columns on a sheet of paper. Wants and needs are subjective things, so be sure that you explain the fine line difference. They don't have to do it in one sitting. Give them time to think about it.

5. Determine how much money and time it will take for teenagers to afford their wants. They can also decide what amount of money they want to save on a monthly basis in an effort to buy something they want. This way they will have some extra spending money for going out with friends or on dates.

Teenagers can learn to use money wisely, but starting to teach them as early as possible will make it easier later on. Financially responsible teenagers will turn into equally responsible adults, capable of caring for their financial needs efficiently.