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Have this money talk with your teen today

Use these tips to help your child make smarter financial choices.

If your teen has started working — even babysitting a few hours a week — it's the perfect time to have a talk about money. These financial professionals share their suggestions for talking about money with your teenager.

Keep money from becoming a taboo topic.

It's hard enough for couples to talk about money let alone include their teens in the discussion, but it's very important that your children feel comfortable talking about finances, says Syble Solomon, an executive coach and financial behavior expert.

"Parents can include their teens in money decisions — be it creating a budget for back-to-school shopping or the family vacation, or just watching a parent pay the bills," Solomon adds. Or let money be the subject of dinner table conversation as you discuss how your own parents handled money and what they taught you about saving or spending.

Monitor their spending.

While teens should be able to keep the money they earn, they shouldn't be able to spend it freely. "Teens need to learn how to be smart about money," says Bethany Palmer, a financial planner, mother of two and coauthor of First Comes Love, Then Comes Money (HarperOne, March 2009). "As part of that process, you have to stay in the know about the money that's coming in and what it's being spent on."

Consider a credit card.

You might think that the best way to avoid all credit card problems is to make sure your teenager doesn't have one. It turns out, however, the opposite is the case, provided teens are taught how to use them. "If you don't teach them how to manage that credit card now, it will spell disaster for them in the future," says Palmer.

Part of the lesson: Teach your teen about interest rates and why it is important to pay off the balance every month. "By working with your teenager to understand how this works, you'll help him or her avoid the credit card trap of minimum payments and mounting debt in the future," says Palmer.

Help your teen set realistic goals.

Too often, people set vague money goals. "For example, many teens think 'This year I want to save more' or 'I want to buy a car when I'm 17,'"; Solomon says. "Instead, encourage them to set concrete goals like 'I will put 10 percent of each paycheck in the bank this year,' or 'Starting this week, I will put $30 a week in my savings account until December 31 for a total of $1,560.'"


Not FDIC or NCUA Insured

May Lose Value. Not a Deposit. No Bank or Credit Union Guarantee

Not Insured by any Federal Government Agency

Syble Solomon is not affiliated with the Principal Financial Group or any of its member companies.

Bethany Palmer is not affiliated with the Principal Financial Group or any of its member companies.

American Bankers Association (ABA) Education Foundation is not affiliated with the Principal Financial Group or any of its member companies.

Insurance issued by Principal Life Insurance Company Insurance issued by Principal Life Insurance Company. Principal Life is a member of the Principal Financial Group, Des Moines, IA 50392.

While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.


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