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Dream with us for a minute. Imagine what our world would look like if we got serious about raising money-smart teens. Our country's student loan debt would disappear, credit card companies would be out of business, and we would have the resources to eliminate poverty and get clean water to millions around the globe.
But even if you can’t solve all the world’s financial problems right now, you can make a difference in your own house. Start today by busting four common money myths your teen might be tempted to believe.
Myth #1 – High school students don’t need to worry about money.
A recent MSN Money survey found that one in four teens didn’t know the difference between a debit card and a credit card. Add to that the fact that more than a third of high school seniors use credit cards and you bet we’ve got a problem! Set your kids up to win with money by teaching them how to be intentional with their dollars. Help your teenager give every dollar a name by setting short-term goals, like saving for a car or a graduation trip with friends.
Myth #2 – Teenagers aren’t old enough to budget.
A study by Education Insider found that 80% of college-bound students haven’t estimated the total amount of money they’ll need to graduate college. With numbers like that, it’s no wonder America’s student debt sits at a record $1.2 trillion!
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Here’s the deal: If you’re old enough to spend money, you’re old enough to budget money. Helping your teen develop smart budgeting habits now for small things like gas money, movie money and shopping money will help them budget for big responsibilities like rent, insurance and retirement later on.
Myth #3 – Credit cards teach teens how to handle money.
Credit cards teach kids to spend money they don’t have. That sounds like the opposite of responsible, doesn’t it? Even so, a recent study by Sallie Mae found that 84% of incoming college freshmen already have a credit card. College should be the time kids are learning important life skills—not becoming slaves to a credit card company. Even if your teen knows better than to play with credit, they need to be aware that credit card companies are pursuing their generation.
A Higher One study revealed that college students receive an average of four phone calls and five mailings encouraging them to apply for credit cards—every month! Teach your teen what it really means to be responsible with money by skipping credit and sticking with cash. Maybe spend a few minutes showing them how much those "emergency" trips to Starbucks or the mall really cost when you add the credit card interest.
Myth #4 – Student loans are good debt.
A recent study found that the average college student graduates with more than $27,000 in student loan debt. Imagine your child is fresh out of college and ready to take on the world . . . but they can't take the job they want because it doesn’t pay enough to cover their student loan payment. Most entry-level positions don't come close to covering the average student loan bill, much less when you factor in the cost of rent, gas and food.
“Good debt” is a contradiction. If anyone tries to tell you otherwise, run the other way!
Being a teenager is hard enough without worrying about debt. Monthly payments are draining—on your bank account and your spirit. You can make sure your teens never experience that by teaching them what it really means to be responsible with money.
To learn more about how you can help your teens win with money, check out the Smart Money Smart Kids class at smartmoneysmartkids.com.