This year I’m excited to be partnering with Discover to share many of the great programs they offer consumers. All opinions are my own.
Did you know that April is Financial Literacy Month? This is a great opportunity to educate your teenage and young adult children on how to better manage their money.
Many teens will be starting their first job this summer and now is a great time to help them get smart about their finances before they bring home their first paycheck.
Here are five ways you can help your kids get on the right financial track this month.
30% of consumers report having no extra cash.* Help your child join the 70% of consumers who have some savings by helping them set up an automatic savings plan, so they have money in case of an emergency or unexpected expense.
Encourage your child to save a small portion of their paycheck every week. Sometimes it helps if you are able to give them a savings incentive.
Savings incentives could be matching their savings contributions, offering to pay for half of things like cars or college (if possible), or giving them bonuses for reaching certain savings goals.
Helping your older child build credit without going into debt is a very important lesson that can impact them financially for years to come.
My first credit card was a secured card, which I highly recommend for teens and young adults. With a secured card you use your initial deposit as your credit limit, meaning you can’t charge more than you’ve put down.
With the Discover it® Secured Card, your child can enjoy the full suite of Discover card benefits like 2% cash back at gas stations and restaurants, while they are building credit. The Discover it Secured Card reports your payment history to all three credit bureaus.
This is a great way to build credit without being tempted to spend more than they can pay every month.
Create a Budget
Last year I sat down with one of my children and helped them create a budget. You can imagine their surprise when they realized they had more bills than money. Their tight budget meant that they were unprepared for any kind of emergency.
Don’t wait until your child needs a major financial intervention to talk about budgeting. Even young children can set up a small budget when they start to receive a regular allowance. Help them make a list of all their monthly expenses and evaluate them based on their regular income.
Remind them to include savings in their budget.
Even though your teenager might not have any credit at sixteen, it’s important to explain to them the importance of maintaining an excellent credit score. Make sure your children know how to obtain a credit report when they are older (Discover cardmembers receive their FICO ® Credit Score for free on monthly statements and online).
Explain to them that paying bills late or not paying them at all will lead to a lower credit score, which could mean higher interest rates on credit cards, auto and home loans in the future.
I remember my son was shocked when he received his first paycheck and it was much less than he expected. He didn’t realize things like taxes and social security would be taking a chunk out of his check every month.
Help your child understand that these deductions need to be accounted for and make sure they have enough taxes taken out of their paycheck every month so they aren’t surprised next April.
It’s never too early to start teaching your kids about money. When it comes to finances, ignorance is not bliss! Set your child up for financial success by helping them develop good spending and saving habits when they are young.