10 Crucial Money Tips to Teach Your Teenagers

A survey conducted in February 2022 about teens and personal finance showed a concerning trend: more than half (54%) of teens feel they aren’t ready for the financial demands of adult life. Additionally, 69% said that rising college costs have impacted their decision to attend higher education. Alarmingly, 41% of teens aren’t getting any financial literacy education in schools. With these insights, it’s vital to consider what financial skills young people can learn now to benefit them in the long run.

Talking to teens about money matters is essential, but overwhelming them with too much information can make them lose interest. The trick is to stick to the basics. Here are ten important topics to get the conversation started:

1. **Budgeting:** Even if they don’t have many expenses now, learning to budget helps teens become financially aware. Teach them how to track what they earn and spend, and stress the importance of living within their means. Dividing their money into savings and spending can help them reach their financial goals.

2. **Savings:** Motivate your teen to start saving. The idea of ‘paying yourself first’ means setting aside a portion of their income for savings before spending on other things. Opening a savings account is a great beginning, and watching their savings grow can be motivating.

3. **Emergency Fund:** Explain why having an emergency fund is important for unexpected situations like medical issues or job loss. Even starting with $1,000 can be useful, but ideally, they should aim to save up to six months’ worth of expenses for added financial security.

4. **Investing:** Provide a basic understanding of investing, including options like stocks, bonds, and mutual funds. Share the benefits of compound interest and growing wealth over time, and point them to useful educational resources.

5. **Debt Management:** Talk about the responsibilities of borrowing money. Highlight how to handle credit cards, understand interest rates, and the importance of paying bills on time to stay out of debt.

6. **Credit Score:** Explain what credit scores are and how they affect life situations like renting, buying a home, or purchasing a car. It’s important they start building a good credit score early.

7. **Needs vs. Wants:** Help your teens understand the difference between necessary expenses (needs) and extras (wants). Encourage them to prioritize needs to develop sound spending habits.

8. **Financial Goal Setting:** Encourage setting achievable financial goals and working towards them. This practice can provide motivation and jumpstart their financial path.

9. **Work and Earning:** Teach the value of a good work ethic and financial responsibility from a young age. Explain how effort at work correlates with income.

10. **Understanding Taxes:** Educate them about tax responsibilities, such as income and sales taxes, and how these affect their overall finances. Start with the basics of what taxes are and their importance.