By: Yolanda Varela Ayala, Esq., CPA, PFS, CPWA®
Sales Manager / Vice President
Wealth Management Division, BPPR
Teens that have been exposed since early age to financial related topics or experienced money management will be better prepared for their financial future. The recommended age to begin educating them is between 7 and 14 years of age. Parents are the main source of information regarding financial education of their children.
What are we doing as parents? Here are several suggestions about how to manage the topic.
Following the common saying “practice makes perfect,” the best way to learn how to manage money is practicing it. We recommend that teens should establish financial goals, such as wanting to buy something they wish. We should promote them to save the money, in order to buy it. Avoid giving them “loans” constantly, if you do, that will only reinforce the belief that you have access to unlimited quantities of money. This is also the time to teach your children to set limits or help them differentiate between what they need to buy and what they wish to buy. Not satisfying all their whims immediately will be a very useful self-control tool for their future.
The first summer job experience of your teen is an excellent opportunity to make them aware that to generate an income entails certain sacrifices. At the same time it could help them start a savings routine. Talk to them about the importance of saving for retirement and why they should start at an early age. What better way than to take advantage of their first job to begin!
Orient them on how to prepare a budget that includes all their expenses and needs, short and long term. That way, they will avoid throwing away the money they have earned.
Visit one of our branches and help them open a savings account. This could bring them financial stability both for the present and future. In addition, it will help them to be more organized and responsible with their resources and how to spend them. Now, with technology, your children can also monitor their account through the Internet, which provides a better opportunity to keep their financial affairs under control.
Encourage reading about financial topics so that your children become familiar with the common terms used in the banking and investment world. There are books and writings aimed at teens that could be useful in this area. Maximize technology and assign them search tasks on the Internet about financial topics and review what they have learned.
Today, teens do not have access to most financial products, but that does not excuse us from the duty of educating them responsibly in financial topics. A financial culture based on the lack of saving and increase in debt is equivalent to a financial crisis. The future financial world will need adults with the ability and knowledge to manage their finances. Help your children to have financial stability in their future.
The suggestions and recommendations included in the financial plan are offered only as an advice, with no guarantee of the yields of any product that may have been acquired pursuant to such recommendations. Banco Popular de Puerto Rico, its subsidiaries and affiliates, do not engage in the offering of accounting, legal or tax advice. If you need accounting, legal or tax advice you should request the services of a competent professional in these areas. Certain restrictions may apply, for more information please contact one of our service centers.