Teaching teenagers about finances
Teaching teenagers about finances is a subject I feel quite strongly about. Partly because Ben has additional needs so this is an area of his development I feel he will need to have assistance for quite some time yet. Another reason I believe this is important is because there are so many people getting into debt through not understanding interest rates etc from a young age.
When to start teaching teenagers about their finances
In my opinion it is never too early to start discussing the subjects of how much things cost and how we chose the better value products in the shops. If you do not tell your teenager how much the bills are they could leave home at 16/18 with no idea at all how much they need for gas and electricity.
I find that encouraging Ben to save is hard. He loves console gaming and wants to spend all his money on new games and add on DLC’s to his games! The idea of being able to trade these in for new games helps him learn. Equally, we remind him that he knows when the new games will come out and if he spends all his money before that he will have to wait until Christmas or birthday for them.
What should we teach them?
In my opinion, the things they really need to know about finances are:
The costs of essential bills such as gas, electricity and water.
The difference between essential living expenses and things like Sky Sports which are a luxury and not essential.
The difference between a debit card and a credit card.
What an overdraft is and the long term effects of living in overdraft.
The actual reality of interest rates on loans, credit cards etc. For example what a 29.9% APR actually means you will be paying back if you take three years to repay a debt.
How to choose the best option for you with bank loans, credit cards, overdrafts, products on finance if you need them. The way you can do this is by looking at APR and how quickly you can afford to pay it back. It’s also possible to teach your children about starting to invest as a teenager.
Where to get help and how to understand different terms
If you are struggling with debt or understanding how to budget then National Debtline is a great resource. It is full of all the information you need to help you find the best solution for you and your family. The website also helps you to budget and would be a great tool to show youngsters.