The results of a Teens & Personal Finance Survey conducted in February 2022 indicated that 54 percent of the surveyed teenagers felt ill-prepared for their financial future. Additionally, 69 percent mentioned that the escalating cost of higher education influenced their decision to pursue a college education.
The same study revealed an alarming fact: 41 percent of teens reported receiving no financial education in their schooling. This prompts a vital question – what can youngsters learn now that will leave a lasting impact on their economic stability?
Below, we dive into ten important financial topics that are key to introduce to your teen. Try not to bombard them with excessive information; instead, focus on delivering vital knowledge without overwhelming them.
1. BUDGETING:
Teach your teen to handle money efficiently, even if they don’t have many expenses yet. Guide them in keeping tabs on income and expenditures, emphasizing the importance of living within their limits.
2. SAVING:
Promote a culture of savings. Illustrate the concept of ‘pay yourself first’ which encourages setting aside a portion of income for savings before any expenditure.
3. EMERGENCY FUND:
Instill the value of having an emergency fund, useful in unexpected circumstances like medical emergencies or loss of income.
4. INVESTING:
Provide a basic outline of investment avenues such as stocks, bonds, and mutual funds. Demonstrate the potential of compound interest and long-term financial growth.
5. DEBT MANAGEMENT:
Describe the implications and responsibility that come with borrowing money, like the use of credit cards, interest rates, and the necessity of timely repayments.
6. CREDIT SCORE:
Enlighten your teen about credit scores and their significance in crucial life experiences like renting a flat, buying a house, or acquiring a car.
7. NEEDS VS. WANTS:
Impart wisdom about the differentiating necessities or ‘needs’ from ‘wants’ or luxuries. Suggest that they prioritize needs over wants.
8. FINANCIAL GOAL-SETTING:
Encourage them to set financial goals, whether it’s short-term or for future big-ticket purchases.
9. WORK AND EARNING:
Discuss the value of hard work and earning their money, and link this action to the intrinsic connection between effort and income.
10. UNDERSTANDING TAXES:
Inform them about taxes, both income and sales, and how they impact their overall finances.
