Learning how to save money, using credit cards and safely navigating the internet is essential for teenagers to become fiscally responsible adults.
Saving is a simple method to grow money over time. Creating a compound interest savings account early on can prepare teens for future investments or emergencies. A small yearly deposit of $100 with a yearly interest rate of 5% can grow to $23,000 over the span of 50 years. In this case, saving is definitely worth it in the long run.
Even though saving money is helpful, it is not the only way to be financially responsible. Teens can also learn to use credit cards wisely. A credit card can open the door to the wonders of online shopping. However, with great financial power comes great responsibility. Because credit debt has high interest rates, you can rack up a huge amount of debt in a short time. This can be avoided by spending only what they can afford in cash and paying off the credit card expenses as soon as possible using reminders or automation to keep on top of payments. Following these simple rules, credit cards can create a good record of responsible use of money. Your credit record can be used to obtain bank loans in the future to buy a house, for example.
Identifying common online threats is important to protect against hackers who can gain access to your money. Online pop-ups promising “free” offers can lead to the risk of identity theft. Identity thieves can open accounts, create fake documents and do other harmful illegal activities-- all under someone else’s name! To protect their personal information, teens need to be cautious with revealing certain details, such as passwords or credit card numbers, both online and in-person. Teens should avoid “free” offers and ignore sketchy sale calls as well.
[Source: Money As You Grow]