How to Talk to Your Teenagers About Budgeting When They Move

In our world of credit cards, payment apps, and one-click purchases, it's easy for teens to never be exposed to real money. But knowing how to create a budget, knowing the difference between good and bad debt, and the power of saving can set your teen up for success when they leave home for college or a career.

Discover next: 6 precious everyday objects that you should never throw away

For You: 4 Awesome Things All Rich People Do With Their Money

We asked Julie Meissner, CRCP, founding partner of Treehouse Wealth Advisors, to share her advice on how to talk to teens about all things money so they can become financially savvy adults.

Speak often

Unfortunately, in many homes, talking about money can be considered awkward or inappropriate. According to Meissner, the topic of money should never be considered taboo.

“Talking about money regularly can help your teen feel more comfortable with the topic,” she said. “A teenager's desire for a new prom dress can open the door to a conversation about cost per outfit or alternatives like Rent the Runway. Decisions about a teen's car choice may include discussions about the price of long-term maintenance, replacement parts, or premium versus regular fuel.

Talking about responsible spending makes the conversation less uncomfortable and helps your teen develop financial skills.

Give them agency

Allowing your teen to participate in decision-making when it comes to expenses that affect them is one of the most powerful tools in a parent's arsenal.

“Walking through options with them is helpful, but putting them in charge of their spending is even better,” Meissner said. “By involving them and taking charge of certain aspects of their financial lives, you can help them learn to flex their financial muscles. » This experience and confidence will become invaluable when they are alone.

Provide resources

Adding other opinions and voices to the budget conversation is a good thing, especially given teens' reluctance to listen to their parents. But fear not, Meissner said. “There are many interesting books, websites and articles that can help high school students learn about money. By providing these resources, you can ensure your teen gets the information they need to make responsible financial decisions.

The story continues

Messnier's list includes:

• I want more pizza by Steve Burkholder

• I will teach you to be rich by Ramit Seth

• The first investor by Michael Zisa

• Why didn't they teach me this at school? by Cary Siegel

Teaching the value of money

Most would agree that earning a dollar teaches important lessons. Meissner said that, if possible, encouraging your teen to find a part-time job may be more valuable to them than the money they earn. “It’s also a good way for them to start building their savings, learn about taxes and gain respect for their income,” she said.

Explain budgeting

Budgeting is a skill that often needs to be taught. “By showing them how to track their income and expenses and set aside money for savings and emergencies, parents can give their children the tools they need to manage their finances successfully,” said Meissner.

Luckily, there's plenty of powerful help available to you through apps like Mint, YNAB, and others. Ask them to explore each and choose the one that best suits their needs.

Encourage savings

With Americans' personal savings rates near all-time lows, it's important to teach early on the importance of financial responsibility and saving for the future. Meissner said a good way to do this is to have your teen open a savings account and match their contributions.

“Set a schedule to track their financial progress and celebrate milestones,” she said. They will experience real growth and hopefully learn and be encouraged by their progress. This is also a good place to teach them how compound interest can work for (and against) them.

Discuss good and bad debt

Although debt is not inevitable, if you are American, it is very likely. But, Meissner said, not all debt is equal, and teaching your teen the difference is one of the most important life lessons you can offer.

“It’s critical that your child understands the difference between good and bad debt so they can make smart financial decisions in college and beyond,” Meissner said. “Good debt is when you borrow money to buy something that will increase in value or generate income. Bad debt is when you borrow money to buy something that will decline in value or that won’t generate income,” she said.

For example, taking out a loan to buy a house or start a business could be considered good and responsible debt, she said. But putting a vacation or a big wedding on a credit card probably isn't a good idea.

More from GOBankingRates

This article originally appeared on GOBankingRates.com: I'm a Financial Expert: How to Talk to Your Teenagers About Budgeting When They Move.