April is Financial Literacy Month!

H & R Block has developed a program called Dollars & Sense to help teens learn financial literacy.  This post is from a writer in that program and has some good information.  Just so you know, FMV is not being financially compensated by H & R block in any manner.  This is just good information.

Dollars & Sense: When It Comes to Teens & Money, Parents Are the Best Teachers

Helping out in a pinch and answering emergencies big and small is part of parenting, but parents who want to avoid frantic calls from their grown children when they’ve run out of money at college or find themselves drowning in credit card debt can start by teaching financial fundamentals early. Teaching teens basic financial skills in high school will lay the foundation for future success.

Managing money is a life skill teenagers can begin to master so they are well prepared when enticed later by credit cards and high-interest loans. Only 14 states require a course in personal finance in school so parents must teach teens to be smart about finances at home.

Kids are going to make mistakes with money. It’s easier to help them through these mistakes when your teen is a minor and still lives at home. Teaching teens money management skills before they graduate can help them avoid costly mistakes as an adult,” said Susan Ehrlich, president of financial services for H&R Block, which provides financial education for teens through its H&R Block Dollars & Sense philanthropic program.

The Dollars & Sense team advises parents to start by helping teens learn the following important lessons:

Prepare a budget and don’t spend more than you earn. While this may seem simple, more than half of adults don’t have a budget and 4-in-10 families spend more than they earn each year. Encourage teens to prepare a budget that includes income from allowance or jobs, regular and expected expenses, and a savings plan. Each month, help them track their expenses and learn tips to stay on budget.

You must pay your bills on time. Defaulting on a loan can have dire consequences – and paying just a few bills late can have a big impact on one’s credit score. Yet, many young adults do not pay their bills on time each month. Teach your teen to be timely with bill payments by tackling the chore together around the same time each month. Getting teens in the habit of a monthly bill-pay day will pay off in the long term.

Before taking on debt, determine the cost to repay any loans. Two-thirds of students who graduate with bachelor’s degrees have student loans, with the average debt of about $27,000 . During your child’s junior year of high school, develop a student loan plan with your teen. Consider how long he will be in school, discuss subsidized versus unsubsidized loans, and use online student loan calculators to estimate his monthly payment after graduation

Big investments often come with unexpected costs. Homes, cars and other investments come along with a range of expenses that are unfamiliar to teens. If your teens have access to a vehicle, require they play a role in the auto’s payment, insurance and maintenance.

Save now and spend later. Studies have shown people spend up to 30 percent more on purchases when using credit cards instead of checks or cash. Rather than start with a credit card, have teens open a checking and savings account, then help them develop a savings plan for their next big purchase. Teens should save at least 30 percent of everything they make from allowance, jobs or gifts.

If you must use credit cards, pay in full each month. Nearly half of households carry a balance on their credit cards, with an average debt of more than $15,000! If your teen takes out a card, help her set a realistic credit limit, then require she pay the balance in full each month. Be sure to discuss interest rates, default rates, annual fees and payment schedules.

For additional tips and guidance, visit www.hrblockdollarsandsense.com Funded by H&R Block Inc., Sense advocates for financial education, provides personal finance curriculum to high schools, and sponsors financial education programs for teens.