“Preparing Youth Financially,” Ensign, July 2002, 72
In the past few years, our two daughters left home to further their education and training. Since financial obligations were a big part of this transition, we started to prepare early. From our experiences we learned several ways to help our teenagers manage their finances so they were better prepared to leave home.
Teach your child to save and budget early. It is difficult for teenagers to save all the money for a four-year college education or other schooling and training. But they can pay a portion and should start saving as soon as possible, ideally in their early teens. Help them develop a budget, and periodically talk about their finances. Don’t be afraid to ask if they have financial problems. When on their own, they may feel too embarrassed to say anything until their once-small financial problems become calamities. Your experience and advice can be as important as your dollars when your teenager is starting out.
Discourage credit card use and unessential student loans. Easy credit is a great temptation, especially if your child’s friends often use credit cards and seem to have a lot of money. Teach about the consequences of debt, which can occur with frequent credit card use, especially for students using their first cards. Encourage your teen to budget available funds and enjoy the blessings of debt-free living. With inflating college costs, student loans are sometimes needed, but they should be used only after a budget has been exhausted and should not be used to finance luxuries unrelated to schooling.
Don’t purchase a car unless it is necessary. Teens do not necessarily need a car at school, though they may be accustomed to driving one at home. Encourage your son or daughter to use a bicycle or public transportation instead.
Write letters or use e-mail. Supply your child with note cards and stamps when they leave home, or use e-mail. Public libraries and many universities and military bases have free e-mail access. Using the telephone to make long-distance calls to you or their friends can create a significant financial burden. An occasional telephone call is a treat, but children don’t need to call home several times a week.
Teach your child to pay tithing and other donations. Encourage teens to pay tithing on whatever modest amount they earn. If applicable, share your testimony about how you paid tithes and fast offerings when you were young and money was tight. Through your example they can realize the blessings of living this commandment, especially during lean times.
Help your child pay taxes. Paying taxes is a new responsibility for many young people. Help them prepare their returns for the first year or two, then discuss the results so they can plan for future withholdings and tax liability.
Prepare for unexpected expenses. Eventually, your child may ask for more money. An unexpected bill may arrive, or an opportunity may arise that requires an immediate deposit. Before teens leave home, explain your financial circumstances and ability to help. When more money is needed, discuss what it will be used for and whether it is a loan or gift. Arrange access to their bank account beforehand, not to pry but to help with emergency transactions.
Financial security does not necessarily come from amassing large amounts of money but from managing what you have. Begin preparing your children in their early teens for the time they will leave home. It is satisfying to prepare them financially and help them achieve their goals.—Debbie Woodward, Elder Creek Ward, Elk Grove California Stake