A survey focusing on Teens & Personal Finance in February 2022 revealed that over half of the surveyed teenagers (54%) felt unprepared to manage their finances as adults. Additionally, a significant majority (69%) reported that the growing costs of higher education have influenced their decision to pursue college.
Interestingly, over four out of every ten teens (41%) claimed they were not acquiring any financial literacy education at school. This leads us to ponder what financial knowledge young people can gain now to benefit their future financial status and overall lives.
If you’re a parent, there are numerous financial matters to discuss with your teenager. However, trying to make them master in every field might lead to disinterest. Instead, focus on teaching them some foundational financial lessons. Here are ten key topics to initiate the discussion:
1. Budgeting: Encourage your teen to account for their income and expenses, even if they are minimal. This will help them understand the importance of money management and living within their means.
2. Saving: Inspire them to save a portion of their income. Show them how to open a savings account and explain the joy of watching their money multiply, especially if there’s a goal in mind.
3. Emergency Fund: Teach them the concept of an emergency fund, which can come in handy during unforeseen circumstances like sudden job loss or a medical emergency.
4. Investing: Introduce basic investment principles such as stocks, bonds, and mutual funds, emphasizing the advantages of compound interest and long-term financial growth.
5. Debt Management: Explain the responsibility entailed with borrowing money and the importance of timely payment to avoid escalating debt.
6. Credit Score: Most teenagers don’t realize the impact of credit scores on various aspects of life, so teaching them about it is crucial.
7. Needs Vs. Wants: Help your teen differentiate between essential expenses and luxury items, guiding them to prioritize needs over wants.
8. Financial Goal Setting: Enabling teenagers to set financial goals provides a tangible finish line for them to pursue, motivating them to start their financial journey.
9. Work and Earning: Instilling a strong work ethic and sense of financial responsibility early on is an essential aspect of financial education.
10. Understanding Taxes: Teach them about income taxes, sales taxes, and how they affect their financial life, including the significance of tax filing.
By engaging with your teens on these topics, you can help set them up for financial success in their adult lives. So, what financial life lessons have you taught your teens? – SmartAsset.com.
