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Financial responsibility is one of the most crucial skills your maturing children need to learn as they begin their adult lives. There are ways you can help them through the learning process as they grow older so that their transition to becoming an adult is easier for both of you. These ways to help your child become financially independent will always be relevant and will provide your children with important lessons they’ll remember for the rest of their lives.
Set Up a Bank Account Together
As your children grow into respectable teenagers, it may be a good idea to provide them with their own bank accounts. A bank account is a great platform to teach your children valuable money lessons and can allow for easy budgeting and money tracking. Banks often have special accounts for children that allow their parents to keep an eye on their spending and add or withdraw funds. Try not to control their bank accounts too much; be the protective guardian they may need, and provide financial advice when necessary. Giving your child a bank account is also necessary if they want to get a job in high school since their money needs to go somewhere.
Help Create Their First Budget
Your children may have expenses in high school that they can budget. Whether they pay the bills or not, gently walk them through the expenses that they’ll need to pay for the things that they want: car payments, gas, or the dreaded phone bill. If they’re working, they can help contribute with payments—but they likely will not make enough to pay for everything. Let them hold onto some of their money for fun activities or college savings.
When your children move out, they may feel overwhelmed with all the new bills they have to pay. You may need to walk them through this budget as well, especially if they haven’t budgeted before. If they’ve recently graduated college, don’t forget to talk them through the different student loan repayment plans. It may be an uncomfortable conversation to have, but it’s necessary for their budget. Keeping your child debt-free should be an essential goal of yours.
Walk Them Through Credit Cards
Credit cards hold a lot of power that may fascinate your children. With one swipe, you can purchase things that are worth far more money than you have in your bank account. If you don’t walk them through how to use a credit card when they’re younger, they could develop reckless spending habits and accrue debt. Help your children understand that they need to be able to pay off anything they buy with their credit card at the end of the month if they don’t want to accrue hefty interest. Teach them that a credit card is not a magic wand that can give them anything they want—credit card debt can lead to financial distress that sticks with them their whole life.
Despite your credit warnings, don’t make your children fear a credit card. If you want to help your child become financially independent, provide them with the knowledge to use credit responsibly.