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Once a teen lands a job — an allowance won't do — open a Roth IRA, or individual retirement account. A Roth IRA allows accountholders to contribute a portion of their paycheck after taxes. That means that when it comes to time to withdraw the funds, they can do so tax-free.
Seaman recommends teens set aside a minimum of 15 percent of their paycheck toward their retirement account. And that parents use the opportunity to teach their kids about the stock market, risk and return, and how as teens they have a long timeline ahead that will allow them to recover from setbacks.
4. MANAGE EARLY CREDIT USE
Managing credit card debt and spending can be a major problem for many borrowers, but especially young cardholders.
Kids under 18 are not allowed to open a credit card account on their own, though use of prepaid cards in high school can help establish good spending habits.
Parents with kids going away to college may want to add the student to their card to cover books or emergency expenses. But a shared card account also can help parents keep tabs on their kids' spending and payment habits.
"It will give you a road map for how to transition them from those constraints to the more open access they will have when they're adults and making their own money," Seaman says.
5. MAKE CAR BUYING A LESSON
How to turn buying a car for your teen into a money management lesson? Rather than handing them the keys to a car on their 16th birthday, get teens involved doing all the homework that goes into a car purchase.
Ask them to compare different models according to features like price, projected maintenance costs and mileage. And have them call insurers to find out how much coverage will cost.
Once they have a better idea of the real costs involved, use that to set their expectations.
6. GET TEENS INVOLVED IN HOUSEHOLD FINANCES
Another way to get teens on track to manage their finances as adults is to give them a closer view of household financial decisions.
Walk them through the monthly bills and let them see how much is spent to keep the heat and the cable TV on, as well as funding retirement accounts and debt payments.
To help frame the money management conversation, the National Endowment for Financial Education has a booklet that can be downloaded for free at www.hsfpp.org .
And for teens nearing graduation or headed for college, check out www.cashcourse.org/prep . The site, also run by NEFE, explains a bevy of financial issues, from budgeting and financial planning, to setting financial goals and planning for retirement.