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Empower your teen with financial literacy now, so they can avoid costly mistakes later in life.

Despite its importance, money management skills aren’t taught in-depth at many high schools, so you are your teen’s best resource. If that made you gulp, we get it. Finance can be a deeply personal subject for many and keeping your teen’s attention can be a challenge unto itself.

But you’ll want to fight the temptation of ripping off the Band-Aid by sitting them down for a one-time “money talk.” Your words could go in one ear and out the other because no one (teen nor adult) likes being lectured.

Instead, use these tips to strike up compelling conversations about money with your teen often — empowering them with financial literacy now, so they don’t have to learn the hard way later.

Use real life examples

Since many financial concepts are foreign to teens, they may see them like abstract notions. You can help them make sense of it all by using real life examples whenever possible. These teachable moments can happen at any time if you’re looking for them.

Even checking the mail has potential. Grab a flashy credit card offer out of your mailbox, and use it for a quick-yet-impactful lesson on compounding interest.

Approach your teen and ask what they’d buy if they could charge any gadget to that credit card. Then ask how much they could pay toward the card balance per month, considering their current allowance (or part-time job).

Now that you’ve piqued their curiosity, use a credit card payoff calculator to illustrate how long it would take to pay and the total cost of the item including interest. Their eyes will be wide open when they see a payment of $40 a month on a $2,000 item will take 13 years to pay and will cost $6,200 after paying a 23 percent annual percentage rate (APR).

View technology as your ally

Use technology to help you teach your teens about money.

Many of the most impactful teaching tools mirror the environment of the learner. In today’s world a teen’s environment is teeming with technology. If you want to grab their attention and make your money lessons and concepts seem relevant, find apps or website to illustrate your points, and use money saving games to make it fun.

At the most basic level, make sure they have a checking or savings account and they know how to access it via online banking and on mobile. Then download a budgeting app and help them create your family’s budget for the month. Or have your teen track spending with financial analysis tools like FinanceWorks, so they can see just how much of their income has gone to video games and fast fashion. If your teen is on the savvy side because you started teaching them at a younger age, you can introduce them to stocks with investment simulators and games.

Introduce portion control

The general recommendation is that 30 percent of income should go to housing, 20 percent should be saved, and about 25 percent should be spent on food and transportation. While most teens don’t have to concern themselves with housing and food costs just yet, they should establish budgeting skills early on.

A simple way to introduce this concept is through the envelope method. Teach your teen how to distribute their money into virtual spending buckets, or envelopes. For example, your teen can choose to split off 30 percent of their cash into savings, 30 percent toward hobbies, 30 percent toward clothes and 10 percent toward transportation.

Be prepared for pushback when it comes to saving money, but once you help them set attainable savings goals (i.e. their first car or the latest pair of Jordan’s), they’ll come around.

Over time, your efforts will pay off and they’ll manage their cash flow like pros, giving both you and their future-selves a sigh of relief. After all, it’s not easy to get out of debt and credit score dings take years to repair, but having frequent conversations about money now is relatively simple.

For more information about family finances and talking to kids about money visit fairwinds.org/learn/family-finances.

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