Bankruptcy Reader

If you are parent to a teen, then you know what it means to have an outgo that is much larger than your income. Well, you really cannot blame your teen for all your expenses, but fact is, those ‘wonder years’ of your children do leave a dent on your purse. According to reports, teens spent around $160 billion last year. By the time a student enters freshman year of college, his/her average debt on a personal credit card is about $1,500. So how do you help them get over their have-now-pay-later attitude? You can either hope they grow out of it OR you can do something about it before your child drowns in debt. You can try a couple of these tips to help your youngster get back on track:

• Teach them that money matters: Financial education seems to be passé today and most schools don’t bother with imparting it. So that means, the onus lies on you to tell your child that every dollar s/he spends has to be accounted for. Help them create a budget and learn to control their spending to remain within their means.
• Supervise: It’s not enough to teach them to budget; you must also keep a watchful eye and ensure that they spend within their means. This is especially true if your child holds a part-time job and has control over his own money. If they earn a decent sum, you could even open a joint account with them and encourage them to save their money.
• Be a role model: You can lecture them until you are hoarse or you can lead by example. Agreed that debt is an integral part of life today and you cannot escape it. But the least you can do is try to stay out of debt as far as you possibly can. If you show your teen that money matters to you and that you are scrupulous with it, chances are, they will catch on fast.

If you are the parent of a teenager, here are some statistics you should worry about: one out of every 10 teens uses a credit card. By the time a student enters freshman year of college, their average debt on a personal credit card is about $1,500. No parent wants to see her child drowning in debt — let alone filing for bankruptcy protection, so you probably need to begin financial education pronto. Msnbc.msn.com reports:

At the very, very least, you need to be a role model. Americans, as a whole, carry about $800 billion in credit card debt. And many are not taking advantage of 401(k)s to save for retirement. If you don’t want your children to fall into the debt trap, set a good example for them. The truth is that parents who are bad with money usually have kids who are bad with money.

Read more: 5 tips to stop your teen from going into debt

Money management is a skill that needs to be constantly practiced to be perfected. Since it doesn’t come easy for grown ups like us, it’s safe to assume that it will be even more difficult for a child to understand the importance of using money correctly. One of the first things you need to do is teach your child to handle an allowance. You have to help them monitor how they spend the money so they know if they are spending over their limits.

Once they are a little older, open a bank account for them. Insist that they put away a little money regularly. Initially, it may be difficult to convince them, but once they see their money growing in the bank, they will be more amenable to the idea. Lastly, teach your child to research on anything they wish to buy before they put their money into it. This will teach them to be careful with their money and will help to make them smart consumers.