Within five years of leaving home, most teens are faced with the decision of taking out student loans, buying a car, signing up for credit cards or even taking out a mortgage. And it’s up to you as a parent to instill some wisdom in your son or daughter, to prevent them from making some serious financial mishaps.
Your teen shouldn’t be burdened with your financial stress, and he or she definitely doesn’t need to know the nitty gritty about any financial mistakes you may have made along the way. But they should know the basics of the common financial situations they’re bound to encounter. Whether you’ve done right with your money, made some financial mistakes, or a little bit of both, here are some worthwhile discussions to have with your teen:
Student Loans. While student loans are often times a necessary debt, they’re still money owed to someone else. And unlike many other forms of debt, this one cannot be discharged in bankruptcy. If you had student loans yourself, you can help your teen by telling them how long it took you to pay them down, as well as what you had to sacrifice along the way.
Car Ownership. If you don’t have a car loan, you should let your teenager know why you paid in cash or how you paid off your car. If you do have an auto loan, it might be helpful to explain that it’s more than just a monthly payment. Sit down and run the numbers with them, demonstrating the money lost to interest.
First Financial has a first-time car buyers program, First Auto. If it’s your teen’s first time buying a car and they meet the criteria, they’ll receive a .25% rate reduction on their approved APR. If they don’t meet the criteria, but still qualify for a First Financial auto loan, they’ll get a $100 gas card.* If it’s not their first time buying a car but they are a recent college grad, we have a special auto loan offer with their first payment deferred for 45 days, up to 100% financing, and an additional rate discount of .25% APR when a graduate checking account is opened at loan closing.**+
We’ve also got a free, handy auto loan payment calculator tool called AutoCalcubot. Calculate your potential car payments instantaneously, save them for later, email a friend, or set-up alerts to let you know when our auto loan rates change.
Credit Cards: If your 18-year-old has a pulse and a mailing address, credit card companies will find them. Your teen should know the responsible ways to build credit and the dangers lurking behind every unnecessary swipe. You can try to convince them that credit cards should be paid off in full each month. If you’ve ever had credit card debt or you do now, your teen should know all the work that goes into paying it off.
If you have a soon to be college graduate, then First Financial has a great starter credit card – guaranteed to have a $500 limit. Higher limits may also be available, based on income, additional credit, and other criteria.+
Mortgage: While a mortgage usually isn’t seen as a mistake, the timing in getting one can be – especially if one isn’t ready or doesn’t have enough saved. Make sure your teen knows the various considerations that go into buying a home, such as the details of the housing market, private mortgage insurance, and interest rates.
First Financial also has a First Mortgage Special Offer for recent college grads, which includes the waiving your first mortgage processing fees with a first mortgage from us!+
What might be second nature to you is a whole new world for your soon-to-be independent teen. The more he or she knows about finances, the better. And sharing your personal financial experiences — the good, the bad and the ugly — will help. Let them learn from your mistakes — and, in the process, keep them from making a few of their own.
*See branch for details on credit qualifications. APR = Annual Percentage Rate. Rates shown are lowest possible and may not apply to every borrower, and higher rates may be charged depending on credit qualifications. Rates as low as 3.99% for up to 60 months. For example, a $15,000 loan at 3.99% APR with a term of 60 months would have a monthly payment amount of $276.18. Subject to credit approval. A First Financial membership is required to obtain a First Financial auto loan and is available to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties.
**Must not have had other vehicles previously financed. Requires automatic payment for monthly loan payments from a Graduate Checking Account.
+All graduate accounts or products and services must be from within 30 days prior to or 12 months after graduation; have a diploma or other proof from a registrar’s office from an accredited two or four-year college or university. For Graduate Loans and Credit cards, verified employment or verification of employment offer from an organization; no derogatory items on credit history. Graduate products and services are not eligible for Rewards First Program.