Your teenage years can be formative in many ways, including learning key lessons about money and finances to help build the foundation for success later in life.
A study from WSFS Bank of 2,005 Americans between ages 18-40 found that many felt they were on their own when it came to learning about finances. Parents topped the list of sources for financial lessons at 36%, while only 23% of respondents said they learned financial skills in school.
With a clear financial literacy gap existing for many, it is vital to work to improve future generations’ money management skills.
Here are tips for how to help your teen build financial confidence as they mature into adulthood.
Earning and Saving
Our teen years often bring with them quite a few milestones, including your first job.
Whether your teenager landed a summer or part-time job at a retailer, started their own lawncare business or is just receiving an allowance for chores around the house, now is a great time to teach them the ins-and-outs of earning and saving.
If you haven’t already, set up a bank account for your child to deposit any money earned so they can start building a nest egg early. Teach them the value of setting financial goals, whether it is to save a certain amount by the end of the year or be able to afford a purchase they’ve had their eye on, and help them build a roadmap to achieve that goal.
Once your child is old enough, consider getting them a debit card linked to their account and setting up online banking, which can help them learn to carefully watch their expenses. Setting up Zelle® can also provide them with a convenient and secure way to make peer-to-peer payments and for you to pay them for chores.
If your child’s account is linked to yours, this can also provide an easy way for you to track their spending and help provide additional guidance.
Learning how to build a budget – both short-term and long-term – is a key element to achieving financial stability and living within your means.
Give your child a chance at some hands-on experience by having them watch you pay your monthly bills so they can get an idea of the variable and fixed expenses to expect when they branch out on their own financially.
Once they have a grasp on the various expenses your family incurs each month, have them help make a budget for the next month or build one for a future goal like purchasing their first car or paying for continued education.
According to a recent study from Cash Connect of 1,500 Americans, 51% said using cash helps them budget their money, with Gen Z being the most likely to agree. It’s important to find a system of budgeting that works best for your individual child, whether that is utilizing cash or budgeting apps like Mint.
It’s never too early to teach your children the value of investing in their future. The sooner you help them build the skillset to budget and save, the more likely they are to be able to achieve their financial goals.
As your child reaches their later teen years, some large expenses likely await on the horizon, such as their first apartment or home, college or vocational school, and more.
With this in mind, ensure your teenager has a firm grasp on how credit and loans work as well as how your credit score can impact your goals, so they understand the full cost some of these financial milestones bring with them.
If you feel you need additional assistance with providing your child with a financial education, there are also a wealth of resources, including educational videos and interactive tools, to help provide lessons in the format they prefer.
Your child’s teenage years are a great opportunity to help build the foundational knowledge needed to achieve their future goals. With the right lessons, you can help them develop into a savvy saver and set them on a path toward financial success.
Helping you boost your financial intelligence.
Read our financial resources from your friends at WSFS.