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Teenagers and Finance
Why is it Important for Teenagers to Learn About Money and Finance?
Let's face it: financial literacy is not taught in schools, and financial exclusion of children is something we Indians have accomplished through time. While parents want to give their children with the greatest education and quality of life possible, they frequently overlook the need of instilling in them sound financial habits that will benefit them in the long term.
As a result, it's critical for you to fill in the blanks and ensure that your child is ready to confront the real world and achieve financial success. So, here are four financial principles that teens should grasp before graduating from high school in order to become financially self-sufficient adults:
Savings and Budgeting
Many young professionals between the ages of 22 and 30 nowadays live paycheck to paycheck and are frequently unable to cope in the event of a financial disaster. With this in mind, it's critical for parents to teach their children about saving and budgeting from a young age.
Make children appreciate the worth of money and the effort required to obtain it. You may, for example, include them in everyday purchases such as groceries and toiletries. Request that they save aside a percentage of their pocket money for college, no matter how tiny. This will assist your college-bound adolescent in preparing for the next important step in his or her life.
The following stage will be to expose them to the concept of budgeting. They should be able to track and control their spending and be aware of where and how they spend their money each month. There are several budgeting applications available today to assist you in creating a budget, setting objectives, and keeping track of your expenditures. This will not only help them better handle their finances, but it will also teach them how to live within their means.
Accounts in a Bank
By the time your child reaches the age of adolescence, you should be able to open a simple savings account for them. It's critical that they understand how a bank account operates, as well as the different fees and charges that come with it, such as ATM fees and minimum balance requirements. Teach them how to write a check and how to understand how it works. Also, explain how debit cards operate and how to keep all of their critical information safe and prevent themselves from any fraud.
Using a Credit Card
While financial knowledge is crucial at any age, the late adolescent years are an especially vital period to begin developing a strong credit history. Teens must understand how to use credit cards properly. Take the time to explain the entire process to them, including how it works, the various Credit Card offers that are available, interest rates, and credit limits, among other things.
It's a good idea to have your youngster go over your monthly Credit Card bills with you to help them grasp the payment period and the costs associated with it. You may also tell them at this point how paying your bills in full improves your Credit Score, which influences your ability to obtain a decent deal on loans and credit cards.
Investing Fundamentals
As kids get more acquainted with ideas like saving and budgeting, it's critical that you introduce them to long-term investing instruments like Fixed Deposits, Mutual Funds, and recurring deposits. Your child does not need to be an expert investor, but they should grasp how compounding works and the difference between saving and investing.
Discuss the advantages of investing at an early age with them. You might start by opening a modest Fixed Deposit account for your youngster to invest in. Introduce them to internet investing possibilities, tax filing, and insurance purchases, among other things. You may also offer a more thorough explanation of stocks and other assets when your youngster grows older.
So, let's sit down and have a conversation! These crucial financial lessons can assist your child in developing lifetime money management skills and making educated decisions as they grow older.
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