Don’t know where to start when it comes to teaching your teens about money? We’ve broken it down into four basic categories to make it easier.

Handle a Paycheck 
Life is expensive for a teenager. They want new clothes, money to socialize, gas in the tank and the latest and greatest gadget. Up until now, their expenses have been minimal and their weekly allowance has probably been enough to cover their wants.

If they’re old enough, this is an optimal time to enter the workforce. A part-time job will teach your teen responsibility and the value of a hard-earned dollar. It also provides opportunity to learn about taxes and budgeting.

Sit down with your teen when they earn that first paycheck and discuss the concept of taxes. Show them how taxes impact take home pay and teach them to examine each pay stub for accuracy. If they are 18, encourage them to open a checking account. Regardless of their age, a savings account will be an important tool as well.

If your teen is too young for a job outside the home, they may be able to make extra cash babysitting, raking leaves for neighbors or doing extra chores around your home.

Develop a Budget
Regardless of how little or how much money an individual makes, having a written budget goes a long way toward stabilizing finances, ensuring that savings goals are kept and bills are paid on time. The first step to developing a budget is to simply list all sources of regular income such as allowance or job earnings. Then have him or her list the expenses they typically pay. Demonstrate that their budget may be consistent or may fluctuate monthly. For example, they may have prom related expenses that only occur in the spring while their car insurance premium remains the same each month.

Talk to your teen about paying themselves first. By setting aside a percentage of their income each month when they’re young, it is easy to develop a savings habit that will last a lifetime. It’s also a good time to set aside funds for those large life expenses like a new car, college education or an emergency fund.

After setting aside some for savings and itemizing their bills, add up the expenses and compare that with the income. If they are spending more than they earn or are spending most of what they earn, talk to your teen about their spending decisions. Are there ways to cut costs or eliminate a frivolous expense?

Once their budget is set, encourage your teen to regularly review and stick with it.

Save for the Future
We touched on it above but the teenage years are a great time to start saving for large life expenses. You provide for their current needs meaning that their expenses should be pretty low. It won’t be long before they are on their own, responsible for their own food and shelter. Life will never again be as inexpensive as it is now and you should encourage your teen to take advantage of these circumstances.

If they don’t have a savings account, assist them in finding a bank and opening one. Then encourage them to tuck away as much money as they can.

Be Smart About Credit
A good credit score will open doors for your teen someday. A good credit score will enable your son or daughter to access better rates for home loans, car loans and even insurance. A good credit score may help them get a job or apartment. A bad score though could wind up costing them a lot of money as well as employment or that apartment in the neighborhood they love.

To help them start out on the right foot, consider helping your teen acquire a credit card with a low limit. Teach them to use the card responsibly, never buying today what they can’t pay for tomorrow. Teach them to pay the balance every month to avoid interest charges.

If you are terrified to hand your teen a credit card, consider starting with a prepaid spending card like the prepaid MasterCard® cards we offer at VCNB. It looks like a credit card but is pre-loaded with funds. It typically is accepted wherever Mastercard is accepted but there is no risk of them running up debt. Once the pre-loaded funds are gone, the card no longer works until you add more.

One More Thing
Keep in mind that your teen is approaching young adulthood. In fact, they sometimes seem very grown- up already. However, your teen is still a kid. Encourage dialog about financial decisions and the questions they have concerning money management. Money and credit will impact their quality of life for the rest of their life. Encourage them to start on the right foot today to secure a lot of bright tomorrows.