Why is it that so many parents read everything they can about how to raise “smart” teens, but don’t take an interest in practical parenting tips for raising financially responsible teenagers? While it is important that our children graduate high school with good grades, it’s arguably more important that we raise financially responsible teens. Why? If teens go off to college without a clue about managing money, then the chances of them living a life without financial worry is slim. Therefore, if you are one of the wise parents out there who want their teens to be financially responsible upon graduation read the practical parenting tips listed below.

Make Your Teen Earn Spending Money: One of the biggest financial mistakes parents make with their teenagers is buying them everything. It’s perfectly fine if you want to help your teenagers out financially, but do so in a way where they are earning their money. After all, this is how it is in the real world. Your boss doesn’t just give you money, right? No, you have to do the work first. Therefore, teach your teens this.

You can do this by having your teen do odd jobs around the house, or you can require that they go get a job for their “fun” money. When you make your teen earn his or her spending money, you will not only be teaching them about the “real world,” but you’ll also be teaching them the value of money as well.

Help Your Teen to Bargain Shop: Now that your teens are working for their spending money, they will begin to see how fast money can go. See, it’s no big deal when it’s mom and dad’s money because there’s always more where that came from. However, teens think differently when they had to spend 30 hours a week working for that money. So, this is the perfect opportunity to teach your teens how to look for bargains.

Obviously, most teens want the name brand clothing and high-tech gadgets that all their friends have, but they don’t have to pay as much for them. Hard-working teens will most likely jump on the chance to buy these things cheaper. Therefore, help them locate the best deals by teaching them about internet shopping, eBay and other online auction sites as well as taking them to outlet malls where name-brand clothing is often found cheaper.

Set Up a Checking/Savings Account: There are many more practical parenting tips for raising financially responsible teenagers than the two listed above. One of them is teaching teens how to manage their own checking and savings account. The only way to do this successfully is by actually setting up a checking/savings account for your teen. While it’s important to teach your teens how to write checks, it’s probably going to be more beneficial to teach your teens how to balance their account while using a debit card.

It’s also a good idea to talk to your teen about saving money. Discuss the benefits of saving money and how depositing just $25 a paycheck will help them build a good savings account for the future.

Practice What You Preach: You can’t teach your teen about financial responsibility if you aren’t being financially responsible yourself. Therefore, make sure that you are leading by example – and that your teen is able to see it. Talk to your teen about your finances and how you got where you are.

As parents, it’s our job to follow practical parenting tips that will help our kids become the best they can be. Therefore, try to incorporate the above tips into your parenting style. Your teens may not like it now, but they will be grateful later!

Almost everyone wants to contribute financially to their children’s or grandchildren’s education, according to The Hartford’s fifth annual college savings survey. However, only 64 percent of respondents are aware of tax-efficient ways to save. With many college saving options available, determining which ones are best for you and your family can be confusing.

529 education savings plans are a great option for tax-advantaged savings. A 529 plan allows you to make investments with earnings that are tax-exempt when they are applied toward eligible higher education expenses.

If you are in the process of developing a college savings plan for your children or grandchildren, it’s always a good idea to talk to your financial advisor. If you’re confused about college savings options, particularly about 529 education savings plans you are not alone. The Hartford survey found that 43 percent of parents and grandparents don’t fully understand this investment tool. Before you talk to your advisor, here are the answers to some frequently asked questions about 529 plans.

How much can you contribute to a 529 education savings plan?

Many states allow the account owner to take a state income tax deduction for contributions made to their plan each year. The amount of the deduction varies by state, and if you roll the funds to another 529 plan not sponsored by that state, your deduction may be subject to recapture.

Under federal gift tax rules, you can contribute up to $13,000 per year for each beneficiary of a 529 account without gift tax consequences. You can also make a tax-exempt contribution of $65,000, or $130,000 for married couples, per beneficiary, once every five years. If you treat the gift as being made over five years, and die before the end of the five year period, the portion of the gift allocatable to the period after your death will be included in your estate. Any additional gifts given by you to the same Designated Beneficiary in the five year period will be subject to federal gift tax. You should consult with your tax advisor for more information.

The account owner has complete control over how contributions are invested and when withdrawals are made.

Who can contribute?

Most plans allow anyone, including friends and relatives to contribute. A 529 contribution is a great way to give the gift of education to a friend or relative who is planning on attending college.

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There are so many different aspects involved in teaching teens how to make smart financial decisions, and one of the most important aspects is teaching teens money management. We all know parents who have dedicated their lives to giving their children anything and everything they want. While it is normal for us to want to provide for our children, we shouldn’t just give them everything. If you do, they will not learn the value of money and will make poor financial decisions when they leave your home.

Teaching teens money management isn’t extremely difficult, but it will involve a little willpower on your part as a parent. While it may be hard at first, it will get easier so don’t give up. Just remember that in the long run, you’ll be helping your teen substantially. Below are a few tips to help you teach your teens the value of money.

Allowance: If you choose to give your teen an allowance, it shouldn’t be just given. You should base your teen’s allowance on the chores he or she does around the house each week. What this does is teach your teen that money isn’t just given, but earned.

Encourage Your Teen to Get a Job: One of the best ways for teens to really learn the value of money is by getting an actual job. Once your teen has a part-time job, then drop the allowance. Your teen needs to understand the correlation between hours worked and money made. This is something that will help him in the long run.

Don’t Pay for Everything: It is reasonable for parents to take their teens shopping for clothes at the beginning of the school year. However, you need to set a budget for what you’re going to spend on your teen and don’t go over it. Then, once the initial school shopping is done, it’s wise for you to make your teen pay for extra articles of clothing she wants throughout the year. This will teach her to prioritize her wants, save money accordingly and pay attention to how much things cost. This principle can be applied to more than just clothing by the way. For example, your teen is capable of saving money to go to the movies, out to eat with a friend, buy makeup and much more.

Attach Responsibility to the Car: Many parents buy their children a car when they turn 16 and don’t require them to pay a dime for, not only the car, but the insurance and gas money as well. There are a couple things you can do when it comes time to purchase a car for your teen. One of the cool things many parents are doing is bargaining with their teens starting when they’re 13 or so. They tell them they’ll match whatever money they have saved up for a car to help them buy a car when they are able to drive. What this does is teaches your teens that the type of car they get depends on how hard they save their money. Other parents buy the car, but require their teens to pay for the insurance and gas. Whatever you do, make sure your teens have some responsibility involving their car.

If you’re looking for great information on ways to fully understand your teen, you can get it right now…any time of the day, any day of the week. Real Life Guidance to Understanding Your Teen is available for easy and instant download to your computer.

I know the title sounds bad, but before you stop reading think about how prominent credit cards are in our society today. Not only are they prominent, but they are easily attainable for college students to get. There are a couple of facts you need to mull over real quick.

• One Third of High School Seniors Have a Credit Card. Okay, so they have their parents’ credit card, right? In some cases, but in about half of these cases the cards are in the student’s name.
• Most College Students Have Credit Cards. Nellie Mae, a student loan maker reported that close to 80% of college students have and use credit cards. In addition to this, the average credit card balance carried by these students is over $3,000.
• Bankruptcy has Went Up in Young Adults. Recent studies have shown that the number of young adults aged 25 and younger filing for bankruptcy is now higher than 5%.

Those are pretty startling statistics and they all revolve around credit cards. Therefore, if you want your teens to make financially smart decisions when they go off to college you need to teach them about credit cards and how they should use them. If you don’t, your teen may contribute to the rising bankruptcy filings in young adults. So, how are you supposed to teach your teens about credit cards?

1. Talk about Credit Cards. The first thing you need to do is talk to your teens about credit cards and the long-term consequences they can have if used poorly. When you talk to your teen about credit cards, don’t just talk about the bad stuff, but also include some of the good things credit cards have to offer. For example, they will help your FICO score rise when used appropriately and they can also be good to have in case an emergency happens unexpectedly.
2. Show Teens How You Use Them. If you own a credit card, then don’t be afraid to show your teens how you handle them. One of the best ways to use a credit card is to use it like a check. What I mean by that is once you swipe the credit card, immediately subtract it from your checkbook. This will ensure that you have the money in your account to pay the bill at the end of the month. If you are having a difficult time managing your credit cards then talk to your teens about that so they can see first-hand how credit card usage can get out-of-control. This is also the perfect time to change the way you use them so your teens can see the correct way to use them.
3. Start with a Debit Card. Debit cards are practically like credit cards in regards to how they work. You take it out, swipe it and take your items home. How they differ is in the fact that they don’t allow the user to carry a balance and charge interest against it. They also take the money out of your teen’s account immediately. So, these are like credit cards with training wheels. Your teen will learn how they work, but will have to immediately take the swiped balance out of his checking account so he doesn’t get overdrawn.
4. Prepaid Credit Cards. Many teens are happy with debit cards and don’t push the credit card issue, but if your teen insists on a credit card before going to college, suggest using a prepaid credit card.

More help is available here to help you teach your teen how to be financially smart.

One of the hardest things for parents to do is share the family’s finances with their teenagers. In fact, a lot of parents don’t even talk to their kids about money. While these parents don’t necessarily think their children will learn how to manage money on their own, they don’t feel that their kids need to know how much money is coming into the household every month. They also don’t feel that they need to “burden” their children with how much money is going out every month either.

While you may agree that teens don’t need to know what the family finances are the truth is that this information will help your teens make financially smart decisions in the future. Of course, you can’t just say, “We bring in $4000 a month and spend $3000 a month in bills,” and expect teens to know how to manage money. Instead, you need to let your teens in on how the finances are done within the home.

One of the best ways to do this is to hold a “financial meeting” twice a month…or however often you balance your checkbook and pay bills. It’s important for your teenagers to see how you budget your finances and be involved in this process. When they see how much money you have coming into the household every month versus how much you spend paying bills, they will begin to gain a better understanding of the value of money. Before your teens can make financially smart decisions, they first must understand the value of money. They need to understand how much things cost, how much you bring in and how much goes out. This will help your teens prioritize which items are necessities and which items they can do without.

While many parents feel that this is placing an unnecessary burden on their teens, the truth is that your teens will learn a lot from this. Think of it like this, dealing with finances is something your teens are eventually going to have to do on their own, therefore, it’s not an “unnecessary burden.” Instead, it’s a necessary burden that they need to learn how to handle. What better time to learn then while they are still under your protective supervision?

There are several important things that this process will teach your teens. First, it will teach them the value of money and how to effectively budget it so that they are able to pay for all their monthly necessities. Your teens will learn a lot from seeing you making the decisions of how much money to allocate where…especially when you take the time to explain why you do it that way.

Secondly, they will learn how to prioritize things. For many teens, money is easy to come by. This is because many parents just give it to them. Therefore, by getting your teens involved in the family finances you will be opening their eyes to the real world. They will begin to think about what they spend their money on and whether or not it’s really worth the amount they’re going to pay for it.

Finally, you’re teaching teens how to handle their own finances when they leave home. Many teens go to college and apply for numerous credit cards and get themselves, and their credit scores, into major trouble…all before they turn 20. However, when parents talk to their teens about money and show them how it works before they leave home, they’re less likely to get themselves into financial trouble later in life.

More budgeting and money management tips can be found here!

It’s a well-known fact that one of the biggest challenges that all adults face is how to properly manage money. Unfortunately, money management isn’t something that’s taught in to kids while they’re still in school. Instead, it’s something that many people learn the hard way, or by trial and error. One of the biggest problems that can arise from learning money management skills through trial and error is that your credit score suffers when you make a mistake.

Of course, as parents we don’t want to see our kids suffer harsh consequences of any kind, but especially consequences that arise from poor money management. Therefore, we need to teach them how to manage their money before they leave the house. The earlier you start, the better, but the teenage years are the most important years to teach this. While there are many ways to go about teaching teens about money, one of the best ways is to share with them the mistakes you’ve made along the way.

All children, but especially teens, enjoy hearing about the mistakes that their parents have made throughout their lives. It’s not because they want to laugh at their parents, but because they like to hear, from their parents, that they’ve made mistakes too. When you share some of the mistakes you’ve made regarding money with your kids, they will feel like you can relate to them and how they feel about things. This is why you shouldn’t be afraid to share your financial past with your teens.

When you begin telling your teens about your financial mistakes, you need to be sure to talk to them about the principles you’ve learned from your mistakes. For example, tell your children about the time in college you decided to leave the dorms and rent a house and how you failed to manage your money so your electricity got turned off. Of course, the important principle you learned here was the importance of budgeting your money accordingly. Therefore, you can share this story with your teen and explain to them how from that day forward you began to budget your money starting with your bills and other mandatory expenses first.

You may not realize it now, but all of the talking you do with your teens while they’re still living at home does have an impact on them and their future. Even though your children will have to learn some things the hard way when it comes to money, they will more than likely remember the important lessons you taught them. Many of those “important lessons” will come from your financial mistakes. You will be surprised at the smart financial decisions your teens make when they leave the house because of the principles you taught them through your past financial mistakes.

For more information on helping your teens be financially smart, click here!

One of the most important things parents can do for their teens that will help them make financially smart decisions is teach them how to budget their money. Many parents make the mistake of just giving their teens whatever it is they want. It doesn’t matter if it’s money to go to the movies, buying clothes or even purchasing a car. However, we all know that this isn’t how it works in real life. All that money that is being given out is earned, by you, and must be accounted for somehow. Therefore, teenagers need to be taught how to budget their money if you want them to succeed financially in the future. Below you will find step-by-step instructions for how to teach your teen to budget his or her money.

Calculate Income: The first thing you need to do with your teen is take the time to figure in how much money he brings in on a weekly, bi-weekly or monthly basis. It doesn’t matter if you give your teen an allowance or he works a part-time job, he needs to figure in all the income.

List Expenses: The second thing that you can help your teen with is listing out all of her monthly expenses. The only expenses that need to be written down are those that you require your teen to pay for. For example, if she is responsible for her cell phone bill, car payment, gas and makeup – then those are the expenses that need to be figured into the equation.

Prioritize Expenses: Thirdly, it’s important that your teen understands the importance of prioritizing the expenses. What expenses are not negotiable? This is something that your teen will have to decide. In the example above, the most obvious necessity is a car because the car is what will get your teen to work to pay for her gas, cell phone and makeup.

Start a Ledger: Once you have the different expenses that your teen requires, it’s time to help him start his own ledger. This can be done either online or with an “old fashioned” ledger book. You need to show your teen how to create different pages for each expense. For example, most teens will need the following pages: Car payment, Insurance, Gas, Cell Phone, Entertainment, Out to Eat and Miscellaneous. Of course, this will vary from teen to teen. While your teen may not see the importance of separating Entertainment, Out to Eat and Miscellaneous – it’s important that they do. This is because it will make your teen much more aware of how much money they spend on food, going to the movies, clothes, etc… Part of budgeting is becoming aware of exactly where your money goes each month.

Keep the Ledger Balanced: Finally, you need to stress the importance of keeping the ledger balanced with the bank. After all, this is the reason for creating a budget – learning proper money management so that your teen always has enough money for necessities and doesn’t get overdrawn. For the first month or two, you will want to help your teen remember to record each and every time he spends money in his ledger. Then, at the end of the month it’s a good idea to sit down with your teen and review his progress. Help him make sure his records match the bank’s records and that he’s balanced. This is not something you should have to do every month, but to make sure your teen understands it, it’s good to do it for the first two or three months.

Protect your child from graduating “book smart but money dumb” – help them avoid debt, financial stress and paycheck-to-paycheck living. Give your child the gift of MoneySmarts – for a lifetime of financial Intelligence, Independence, Security and Success!

Allowing your teen to get a part-time job in high school is a tough decision. For some parents, it is a financial necessity. For others, it is a sacrifice that takes the teen out of the house much too often. For most, however, it is more a question of whether or not the teen will get any value from the job or if working early in life takes away from the enjoyment of youth.

The decision you make should be partly dependent on what your teen wants and needs, but that should not be the only concern. Before you let your teen work, there are certain things you should consider:

How good are your teen’s grades? Is he or she responsible with homework? Can your teen manage his or her schedule well enough to add work and still get everything done that is required? Can he or she find work that will be flexible with the school schedule or extracurricular activities in which your teen participates?

Responsibility
Has your teen demonstrated responsibility by following house rules? A job requires your teen to be responsible for adhering to a schedule, using teamwork, and showing up even when he or she would rather be with friends. Does your teen have the self-discipline to work? Is your teen capable of getting himself or herself out of bed in the morning without you having to help? If their work schedule is simply something else you will be responsible for keeping track of, you may want to reconsider. Before allowing your teen to work, you should talk to them about all the things they may encounter. Your teen needs to have good  hygiene and maintain a professional appearance (it is even ok to make your teen responsible for doing his or her own laundry to keep a uniform clean).

Your teen should be able to handle criticism well and tolerate constructive criticism. Does your teen get along well with others?  Most employment for teens is in retail, requiring them to work with
other teens and adults as well as provide customer service.

Purpose
Why does your teen want a paycheck? Does he or she have specific goals in mind? Can you help them develop a plan so that they can save some of the money they earn? While allowing your teen to work while in school can be a difficult and personal choice, and the job may affect your entire family because the schedule will throw off things like family dinner times, working can help your teen develop a sense of responsibility and maturity.

Your teen’s job can also teach him or her valuable skills that will be useful later in life. It can also help your teen’s self-esteem and give him or her a sense of control over his or her own life.  Having a job and maintaining a good grade point average can provide your teen with a competitive edge when applying to college as well.

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The majority of parents want to raise their children in a way that will prepare them for life in the real world. As all adults know, money is the foundation of living a comfortable life. Then, why is it that parents who want to raise kids to be responsible adults don’t think about the importance of teaching them about money? Kids go to school and learn about history, math, science and a host of other things, but they don’t go through a financial class that prepares them for managing money. No, this is left for parents to do. So, how does one raise a financially responsible teenager?

The first step is to talk to your teen about money. Don’t be afraid to share details with them about your finances. All kids, and especially teenagers, need to understand how money works and the importance of managing it correctly. Parents can start talking to their kids about money before they become teenagers, but it is something that is an absolute must for those who want to raise financially responsible teenagers.

The best way for teenagers to learn the value of money is to learn by trial and error. This is why encouraging teens to get a part-time job is a great idea. By working a part-time job, even if it only is in the summer, teenagers will learn to appreciate the connection between work and money. Now, to help teens learn to manage their money wisely, parents need to start requiring their teens to pay for some of their own things.

Nothing will be accomplished if your teenager is working part-time, but is able to spend his money on whatever he wants because you are providing him with all his necessities such as a cell phone, car, gas, clothing, etc. Now, that doesn’t mean everything has to be turned over to your teen. For example, if you prefer to pay for your teen’s car payment and insurance then you could considering making him pay for the gas money. Also, it’s a great idea to set a budget of how much you are willing to spend on your teen’s clothing each year and don’t go over it. When the limit is reached, your teen will have to start buying clothing with his money.

By taking simple steps like those listed above, you will be showing your teen how to manage money through real life lessons. It’s possible that your teen will make mistakes. For instance, he buys some clothes he really wants and then realizes he doesn’t have enough money for gas to go out on the weekend. Well, then the solution is he doesn’t go out. Yes, it will be hard to not hand over some extra cash to your teen so he can have a nice weekend, but by refusing to do so you are showing him the importance of managing money. It is better that your teenager learns these lessons while he’s still under your protective care than when he’s off to college and gets evicted from his apartment due to lack of money management skills.

Raising financially responsible teenagers is not a simple thing to do, but it is possible. And, when parents take the time to teach their kids about money and how to manage it properly, they are teaching them important lessons that will follow them for their entire life. When you successfully raise a financially responsible teenager, you will be able to rest much easier when he leaves for college and enters the real world. And, that’s the ultimate goal!

Protect your child from graduating “book smart but money dumb” – help them avoid debt, financial stress and paycheck-to-paycheck living. Give your child the gift of MoneySmarts – for a lifetime of financial Intelligence, Independence, Security and Success!