Tuesday, October 20, 2009

Helping Your Teen be Financially Fit

If you have a typical teenager or young adult in your house…they probably think they know all that they need to know to be independent. But do they know all they need to know to manage their finances successfully? Chances are they do not since the fastest growing group of individuals filing for bankruptcy is 18-25 year olds and Maryland colleges are having more students drop out due to credit card debt than failing grades.

Here are some tips you should teach your teen:

1) How to create a budget and stick to it—Discuss needs vs. wants

2) The importance of saving—start young—and include savings in their budget

3) Beware of the numerous credit card offers they will receive. While building credit is an important step in managing their finances—they need to do their research before choosing a credit card—they need to know the interest rate, how long that rate will last, any fees associated with the card and most importantly they need to know that carrying a balance on a credit card can be a dangerous way to spend their money—it will take years to pay off this debt if they only pay the minimum balance due—and the amount repaid will well exceed the amount originally spent.

4) Beware of anyone asking for personal information—whether by phone or email—ID Theft is on the rise and we, as consumers, need to stop giving out our personal information

5) Credit reports are important and need to be checked at least once a year. If there are errors on it, take the time to dispute it and get the report corrected.

6) Be a smart consumer by doing research before buying, avoid impulse buying, comparison shop, keep documentation and read everything before signing on the dotted line.

By helping your teen be a smart consumer and manage their money wisely, you will help them on the road to be financially independent—keep in mind they may not thank you right away for this but when they are able to buy their own house later in life, know that you did the right thing.

For more information check: www.mdfinancialskills.org
www.mymoney.gov