Teens and Financial Responsibility

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Author – Jayson Goetz

Teens and Financial Responsibility


Like most teenagers, I hated high school math classes. Don’t get me wrong, I understood the importance of basic arithmetic skills, and I could even see value in geometry. Advanced calculus, on the other hand, made me wonder, “when will I ever use this?” Now that I’m older, I wish I could have taken classes like “Interest Rates 101” or “Advanced Budgeting.” My mom did her best to prepare me for “the real world,” but some lessons are impossible to learn without experience.


A monthly allowance can teach your teenager a lot, but it won’t teach them the value of a good credit score. In simple terms, a credit score measures the likelihood that an individual will pay back a particular amount of money. That’s why someone with no credit score is viewed less favorably than someone with a poor credit score. Help your teen build credit and learn financial responsibility by using some of these five methods:

1) Make Your Teen an Authorized User


If you have a credit card, think about adding your teen as an authorized user. This simple action will help them build valuable credit without taking on additional debt. Be careful, though. It’s easy for teens to get carried away with a credit card. Don’t try this method if you worry about your own credit score.

2) Help Your Teen Apply for a Secured Credit Card


If you can afford it, consider signing your teen up for a secured credit card with a low limit. Secured credit cards are perfect for teenagers because they’re connected to cash collateral. In a worst-case scenario, the creditor can pay for the debt with the cash you provided. This method will help your teen learn to manage a small amount of debt without unnecessary risk.

3) Ask Your Teen to Pay a Bill


A regular bill can help your teenager learn how to manage monthly payments. The type of bill doesn’t matter as long as it’s small and low risk. If your teenager likes to upgrade their phone, consider helping them sign up for their own phone plan. Alternatively, if they have a car, consider letting them pay for the insurance.

4) Help Your Teen Purchase a Vehicle


As your teens get older, it may become necessary to purchase them a vehicle. If you think they’re up for it, consider making them responsible for a portion of the car payment. In addition to teaching responsibility and building credit, this method will also help your teen learn the value of a vehicle.

5) Explain the Importance of Saving


When you’re in your teens, retirement is a lifetime away. As a parent, it’s important to teach your teenager that it’s never too early to start saving. Consider taking them to a financial planner to learn about independent retirement accounts, 401(k) plans, and government pensions. This information will help your teenager start to think about a long-term financial plan.


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