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The best thing you can do for your teens at a time like this where there is a global economic crisis is to teach them financial freedom hacks that will help them become financially free soon.
Before we look at the 10 financial freedom hacks your teens should know which are common and basic knowledge. Let’s start with these
Two out-of-the-box financial freedom knowledge to teach your teens you won’t find anywhere
I call this the basic two ways to grow wealth. I have written indepthly about it here but here is a summary of what it is about.
1. Growing wealth through career
It might look like only business owners or moguls are making tons of money in the world. However, make your child understand that, that part is not for everyone and big success can come even in career parts that are not business in nature.
Tell them that good fortune and wealth can come if they stay diligent in their career, Through discovery, invention, studies, and innovations. They could be the first to discover something new in the career part they are in.
Teach them what it takes to stand out, and be successful and wealthy in a career. You don’t have to use yourself as an example as they might not see it. But give them examples of people that will inspire them.
I have written extensively on how to grow income through a career here. So read about it and see how to start educating and guiding your children.
2. Growing wealth through business
Children are never young to understand buying, selling, and profit. When I was in elementary school I was barely 6 years old. I told my parents I wanted to sell a local snack during the long holidays. We weren’t poor so it wasn’t child labour. At that time I just wanted to make my own money. Though I ate most of the snacks (LOL) I managed to make sales at the end of every day. By the end of the holidays, I bought a rubber flip-flop for myself. I was so happy and thinking about it today still makes me happy. I grew up loving business and until today I make and sell things.
What if my parents said no because I was too young and they could provide? I would have never discovered myself. Therefore, when you identify a child among your children who is very interested in the art of buying, selling, and making a profit. Find a way to teach them because they are not too young to learn.
Why teach your teenagers financial freedom early?
- Develop Responsible Money Habits: Teaching teenagers financial freedom hacks early helps them develop responsible spending, saving, and budgeting habits that will serve them well throughout their lives.
- Avoid Future Debt: By understanding how to manage money effectively, teens are less likely to fall into debt traps such as credit card misuse or taking on excessive student loans.
- Build Financial Confidence: Early exposure to financial management builds confidence in handling money, allowing teens to make informed decisions and avoid financial pitfalls as they gain independence.
- Empower Long-Term Goal Setting: Learning about saving, investing, and financial planning enables teenagers to set and achieve long-term goals, such as buying a car, funding their education, or starting a business.
- Cultivate a Mindset of Independence: Teaching financial freedom hacks fosters a sense of independence and responsibility, preparing teens to manage their finances effectively as they transition into adulthood.
10 Financial freedom hacks to teach your teens
Your child can become financially free in an early stage if only you can teach and manage them properly. The world is changing economically and you can help your children skip the debt part of adulting. Brake down these financial freedom hacks to their level and see how they become mature financially in no time.
Budgeting Basics:
Teach them the importance of creating and sticking to a budget. Show them how to track income, expenses, and savings goals using tools like spreadsheets or budgeting apps.
Saving Early and Consistently:
Emphasize the power of compound interest by encouraging them to start saving early and consistently. Teach them to prioritize saving a portion of their income, even if it’s just a small amount.
Understanding Debt:
Teach teenagers about the different types of debt, such as credit cards, student loans, and mortgages. Stress the importance of borrowing responsibly and only taking on debt when necessary.
Building Credit Responsibly:
Explain how credit works and the importance of maintaining a good credit score. Teach them about factors that affect credit scores and the long-term implications of good and bad credit.
Investing Basics:
Introduce teenagers to the concept of investing and the different investment vehicles available, such as stocks, bonds, mutual funds, and real estate. Teach them about risk and return, diversification, and the power of long-term investing.
Financial Goal Setting:
Encourage teenagers to set both short-term and long-term financial goals. Help them break down their goals into actionable steps and create a plan to achieve them.
Understanding Taxes:
Teach teenagers about the basics of taxes, including how they are calculated, different types of taxes (e.g., income tax, sales tax), and the importance of filing tax returns accurately and on time.
Living Within Means:
Instill the importance of living within one’s means and avoiding lifestyle inflation. Teach teenagers to differentiate between needs and wants and to prioritize spending on necessities while being mindful of discretionary expenses.
Critical Thinking About Financial Products:
Teach teenagers to critically evaluate financial products and services, such as bank accounts, credit cards, and loans. Help them understand fees, interest rates, terms and conditions, and how to choose the best options for their needs.
Financial Independence and Entrepreneurship:
Encourage teenagers to explore paths to financial independence, such as entrepreneurship, freelancing, or passive income streams. Teach them to think creatively about generating income and building wealth outside of traditional employment.
Conclusion
With proper help, exposure, and guidance, your teenager can gain financial freedom in no time. You can change the vicious cycle of a life of debt and limitation by teaching them at a very young age how to become wealthy and successful the right way.
