Everyone wants to live a life that is free of all debts. But it seems next to impossible in this costly world. Getting through a day without spending money seems like a task. Today’s lifestyle demands money in any form and through any source. This also means that it is important that you manage your money. Now, being free of debt might seem next to impossible in this stage of life. This can only be possible if you would have inculcated some ideas of managing money in your teenage. Especially, at the time when you were most excited to spend money earned by yourself. Anyhow, if you could not do it you can surely train your kid to lead a debt-free life. Here are some tips that can guide them to live a debt-free life.
Saving equals priority
When you talk to a teenager about savings they may say that is the boring and adult thing to do. This seems fair because they have just started to live their life to the fullest. Just started working and getting paid will increase an urge to spend money on anything and everything without a second thought. But it is also true that you must get the habit of saving money at an early age. This can help you in many stages of life. Saving money should be a topmost priority of a teenager. It is not like you need to save all the money you earn. You should only save a certain part which can come in hand. Saving now can help develop a habit that can be useful even in the future.
Budgeting and long term big goals
Once you teach them the benefits of saving the next big step is budgeting. This habit can be imbibed in them just from childhood. It can be done by giving a certain amount as an allowance per month and telling them to manage all their expenses in that money. A habit that they learn early only gets better with time. Budgeting can get them through any tough financial phase hence it lessens the odds of choosing debt. Budgeting can get some more perks like delayed gratification, for instance, if they make a budget and save some amount, that amount can be later used to spend on something big like buying or maintaining a car.
A savings account
As you discuss savings and long-term goals with the teenagers, you might as well bring up a savings account. It is important to understand that a savings account is an upgrade to saving money. It is another form of delayed gratification. This is because when you open a savings account and deposit your money into it, the money will not only be saved but will also help you earn an interest rate on that money. Opening a high-yielding saving account can give a high interest rate. It is not only a good habit but a good motivation to save money and save it in a savings account.
About credit cards
Credit cards still sound like a debt plan for many. But if you use it properly, that is not the case. People consider it as ‘free money’’. Those people who do not know about its basics say so. And if used properly, it can help build good financial habits. But there is a thin line between addiction and good use of a credit card. One needs to understand the interest rates which can help in estimating the expenditure. Another way to do that is to keep a track of the bill that you get per month. This keeping track can help control the spending of money if it is getting out of hand. As the two sides of a coin, using a credit card has rewards and potential pitfalls too.
There is nothing rogue than a teenage period. Being reckless can take you places that know no return. The repercussions can cost you many things. Hence, you must plan things properly when there is time. Money is like sand, it slips through your fingers in just a blink. It requires a lot of planning and be insightful to have money in your hands when you need it. For that, all you have to do is plan your crucial years properly and avoid yourself from getting into a debt that can get difficult to get out of. Debts are a burden and you do not want to have something on your head for a lifetime. Only then you can live a peaceful life.