By Terry Sawchuk
Teenagers aren’t always known for being logical and responsible, especially with money. But given the right tools and opportunities, this is an ideal time for them to set a financial foundation that will benefit them for the rest of their life. So, before they leave the nest and head out into the real world, take these steps to help them prepare for financial independence.
1. Let Them Earn an Income
Kids learn best by doing, by having hands-on opportunities to try something, fail or succeed, and learn from the experience. If your teen is old enough, let them take on a part-time job, either permanently or temporarily, during school breaks. If they’re not quite old enough (or too busy with extracurricular activities), pay them for doing jobs around the house, whether that’s mowing the lawn, making dinner, or cleaning out the garage.
Letting your teen earn their own income is exciting! It teaches them about taxes, gives them their own spending money, helps them become a more responsible and independent person, and allows them to feel empowered and capable.
2. Help Them Set Financial Goals
Once your teen has some income to work with, help them set financial goals. They may want to save for a car, some college expenses, or even a post-graduation trip with friends. Whatever it is, help them calculate how much they need to save each month to reach their goal by a certain date. This gives them something tangible to work toward and shows them the value of saving. If they are motivated to save for something in the future, it encourages them to weigh the opportunity cost of buying something now versus saving the money for later.
3. Show Them How to Track Spending
We all know how little purchases can add up to huge expenses over time. Coffee on your way to work. Take-out on your way home. A small purchase on Amazon. Before you know it, $100 is out the window.
Your teen can keep their spending in check by tracking their own expenses. As a tech-savvy teen, they’ll likely find a budgeting app more appealing than using the old pen-and-paper method. A quick online search will reveal several apps out there that can help your teen stay on top of their spending and track expenses in real time.
Set Them Up for Success!
Teaching your teen the importance of financial independence is no easy feat. But if you put in the hard work now, they’ll be less likely to depend on you financially in their 30s and beyond. At Sawchuk Wealth, we’re dedicated to helping you and your teen experience financial success. Schedule a call online here or call 248-269-9700 if you’d like us to do just that!
Terry Sawchuk is the founder, chairman, and financial consultant at Sawchuk Wealth, a comprehensive wealth management firm that is devoted to helping successful families and businesses live their best financial life. With over 30 years of industry experience, Terry spends his days helping clients pursue their financial and lifestyle goals, work toward a work-optional lifestyle, and navigate through the critical financial events of their lives. Terry’s business philosophy remains the same as it has been from the beginning: to build long-term relationships based on trust. Terry holds the NSSA (National Social Security Association) certification, as well as his Series 6, 7, 24, 63, and 65 securities registrations. In the Metro-Detroit area, Terry Sawchuk is a well-recognized name, as he was a prominent personality on radio and TV as the host of Wealth Strategies on WJR for many years, as well as a co-host of Real Estate and Business Insiders on the local ABC affiliate. Terry is a staunch advocate of the mind–body connection and is passionate about regular exercise and healthy eating. In his spare time, Terry is an avid golfer and a big University of Michigan fan. In Terry’s mind, the best thing he can do with his time is to spend it with his beautiful wife, Amy, and their five children. To learn more about Terry, connect with him on LinkedIn.