Helping Teens Build a Strong Financial Foundation
Teens are at a critical age to learn financial skills so money becomes a tool to help them reach goals and meet needs rather than a continuous source of anxiety and stress.
How do we teach teens how to make good choices so they can survive on their own one day? It is a process and they are sure to learn some lessons the hard way, but here are a few ideas.
1. Talk about it. Teens can’t learn about money if it is never talked about. You don’t need to be perfect at managing your own finances. Start where you are most confident. Consider what you wish you had learned and share why it is important. When it comes to paying bills or budgeting for groceries, consider pulling your teen in to participate.
2. Give teens the responsibility of a checking and savings account. It’s better to learn how to use and manage bank accounts when you have less to manage rather than more. Your teen should have both a savings account and a checking account. Teach them how to track their deposits and spending using a checkbook register. Show them how to compare their records against their monthly bank statement. If you need some help do a YouTube search for “How to Balance a Checkbook for Students.” If you are out of practice of keeping one yourself, this is a great time to pick it back up.
3. Discuss how to earn money. By this age, teens understand that money does not grow on trees or magically come from a plastic card. They may enjoy consuming and spending while not fully appreciating the value and need to earn money. Do they want more money? Are they willing to exchange some free time to earn more? Discuss options like babysitting or mowing lawns. Are they interested in earning even more by working a part-time job at a grocery store or local restaurant? Could they increase their savings account balance by simply selling some of their personal items?
4. Talk about long-term goals. Whether it be a car, college or going on a special trip, discuss why the goal is important. How do they plan to work towards it? What does the timeline look like to achieve this financial goal and what else they can do to make it a reality?
5. Create a budget. It doesn’t matter how much income they have, creating a simple plan for how they intend to use (and save) their money, from gifts, a job, or allowance, is a great habit to develop.
6. Let them fail. It is disappointing, but failure is often the best teacher. Don’t be afraid to allow them to learn this way.
7. Talk about credit cards. The most common question we are asked by students is what is the difference between a debit card and credit card. Knowing that credit cards are loans, as well as the risks and benefits of using one is essential to becoming a financially responsible young adult.
Our bankers love helping their young customers grow into financially responsible adults. Contact your banker for options to help your teen or to schedule an appointment to discuss banking and money basics.