You can make the theory that your teenager are taught in the economics class come alive by giving them the opportunity to practice it in real live or to observe you doing it. Teach and show them the following lessons:
- School and university fees are expensive. Have discussions about how education is expensive, why it is expensive and what type of plans you can make to be able to afford it. There are a lot of hidden expenses that can surprise kids and parents. Read about the ways to make education more affordable.
- Use an income and expenses budgeting worksheet to explain to them how to budget. Your teenager should have responsibilities that they have to pay for using their pocket money. This can include toiletries, entertainment and clothes. Help them plan for what they need and what they want.
- A credit card charges high interest rates. You can discuss with your child how you don’t charge everyday items on the credit card, but rather keep it for an emergency. If you do have to use it you should pay off the money owed in full each month. Your spending behaviour will teach your children more than any book can.
- Paying bills late can hurt your credit reputation. If you don’t pay your bills it has consequences and it might hurt you in the long run, for example, you won’t be able to get a loan to buy a car or home.
- You should protect your personal details online. Teach them about online banking, how convenient it can be if you are responsible and doesn’t save your password or fall for phishing mails.
- You pay tax on your salary. Prepare your child that their first salary might be smaller than they expect because of tax. Talk about and show them why it is necessary to pay tax: so that schools, roads, hospitals and other services can be funded or maintained.
- Have an emergency fund. Teach them that they should save up for unforeseen emergencies.