College Bound: How to Start Your Teen on the Right Financial Foot

April 19, 2023 by Spectrum Credit Union

As a parent, you want to give your children the best start in life, and that includes teaching them about money management. However, when it comes to financial literacy, many teens don't receive the guidance they need. According to a recent study, only one in four high school students are required to take a personal finance course before graduation.

Fortunately, there are steps you can take to help your teens develop good money habits early on.

Learn to budget

One of the most important things your child can learn is how to budget. Encourage them to create a budget and stick to it.

  • Start with the basics: Make sure your teen understands the basics of money management, such as the difference between needs and wants, and how to differentiate between them.
  • Make it relatable: Use examples they can relate to — like budgeting income from a part-time job.
  • Involve them in the process: Encourage your teen to take an active role in creating and managing their budget.
  • Set goals: Help them set realistic financial goals, such as saving for a car or a college fund. This will give them a reason to stick to their budget and make it easier for them to stay motivated.
  • Monitor progress: Check in regularly. Offer guidance and support as needed and be open to adjusting if their budget isn't working for them.

Save early (and often)

By encouraging your teen to start saving early, you’re imparting the financial wisdom of compound interest. Even if they can only contribute a small amount at first, they’ll see their investment grow over time.

Opening their own savings account will also give your teen the freedom to control their own deposits. The MySavings Youth Account provides teens with empowering features like above-average interest rates and the ability to have their own ATM card. 

Start building credit

Your credit score is one of your most important financial tools. Start your teen off on the right foot by imparting good credit habits.

  • Credit basics: Start by explaining the basics, including credit scores, credit reports and how credit affects their ability to borrow money in the future.
  • Adding an authorized user: Adding your teen as an authorized user to your credit card will allow them to start building their own credit history. Be sure to set clear rules and expectations for how the card should be used.
  • On-time payments: Create a monthly due date and amount for your credit card and have your teen pay on time.
  • Monitoring credit: Help your teenager keep track of their credit by checking their credit report. Pro tip: You can request your child’s credit report by mailing each credit bureau.

Paying for college

Attending a four-year university now costs $25,707 per year, on average. No matter what your financial plans are for college, your teen can learn a lot from being involved early on.

Start by having money conversations with your teen. Talk about the cost of attending — including tuition and costs of living. Sites like colleging.com can help your teen learn more about financing their higher education.

Once your teen knows what is expected, encourage them to participate in their own college funding. For example, they can save money to put toward their cost of living by working a part-time job in the summer.

Teens can also get involved by researching and applying for scholarships and grants. There are many organizations that offer them to students based on academic merit, financial need and other criteria. Encourage your teenager to research these opportunities through online resources, scholarship databases and college financial aid offices.


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