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Teens figure they must know a lot about money. After all, they spend more than $100 billion of it every year, and many even earn part of that. The reality is that they are woefully short on the knowledge and tools they need to manage their own money.
Teaching your teen about money is really preparing them to be responsible, self-reliant adults. Here are five great money skills for teens:
Manage a Checking Account
If your child receives a paycheck or is going to college, she should have her own checking account. Shop for one with the smallest balance requirement and the lowest service charge. Balance the checkbook with her for the first few months. And make sure she understands about fees for bounced checks and how to report a lost checkbook.
Prepare and Follow a Spending Plan
If $100 running shoes don't fit in the family budget but your child insists that his social life will shrivel without them, set up a clothing allowance.
Calculate a reasonable amount for a year's worth of clothing and dole it out in quarterly chunks. If your child overspends, he can stop buying or add his own money.
For college-bound teens, work out a month-by-month spending plan with them and then have your child track expenses. A pencil-and-paper system works fine, although some teens prefer computer programs like Quicken.
The typical teen receives a steady flow of credit card offers and yet knows very little about how they work. Here are the essentials: