A Junior Achievement survey sponsored by the Allstate Foundation found 84% of teens expect their parents to show them how to manage money. Since most teens have used their parent’s debit or credit card to purchase items online, it’s probably way past time to have a thoughtfully planned money management conversation.

Regular money management conversations are a good start, but it’s even better when you spend time with your teen to create a long-term financial plan. I’m fortunate that my parents took the time three years ago, yes I’m in high school, to help me create a short-term and a long-term budget. They also told me that if I had enough free time to pay attention to TikTok, I also had enough free time to properly manage my budgets. Here’s a tip, talking to your teen should happen when you are calm and have thought through what you would like to discuss. Too many parents make the mistake of only having money management conversations in response to a poor money management decision made by their teen. Many of my friends have parents that say nothing or they get angry and suspend credit or debit privileges. These parents don’t understand when there isn’t a constructive conversation their kids aren’t learning how to properly solve problems.  Fortunately for me, my parents make themselves available to discuss my questions and they have also been honest about some of their previous money management mistakes. Another blessing is my parents aren’t afraid to set limits, hold me accountable, or tell me no.

Although the CARD Act makes it harder for teens to get credit cards, almost 50% of college students either have a credit card with a security deposit, or have a credit card with an adult co-signer. The 2019 market research survey conducted by Ipsos also reveals that college students, with credit cards, have an average balance of $1,423 spread out among five credit cards. What doesn’t get reported his how many high school students have credit cards with a parent as co-signer.  As a high school student I have already seen some of my high school classmates fall into the debt trap mentality. They don’t understand responsible spending or the financial consequences of bad credit card purchase decisions. In fact, many don’t really understand the difference between credit and debit cards.

Take the time to communicate how high credit card interest rates dramatically increase the amount that will ultimately have to be paid to the credit card companies. Let them know that interest on long term debt leads to a seemingly never ending cycle where additional interest will have to be paid on the accumulated interest and fees, especially if any of the payments are late. In fact, many people pay more in interest than the price of the original item itself. More than 70% of Americans are unaware that for every $1,000 of long-term credit card debt, the true cost is closer to $2,500 because of interest and fees. It’s also important to share that the impact of ongoing interest payments diverts money that could be used for college or for building their savings.  

I created Math-Can-Be-Easy.com  so parents and teens can control the key financial inputs and better understand the calculations they see on their computer. It’s a free website, with no ads or information requests, so you can feel comfortable using it as much as possible to gain insight about how credit card debt is calculated. I encourage you to look at the negative impact of credit card debt, as well as the positive results compound interest has on even a small long-term investment. As a teen I’m aware that most money management videos are often time consuming and that many people might buy a helpful book, but they don’t seem to get around to reading it. Hopefully the easy-to-use apps on the website will catch and keep your attention. Next step, a good night’s sleep knowing your teen might avoid the same mistakes you or others made over the years.