A survey on Teens & Personal Finance from February 2022 revealed that over half of the participating teenagers (54 percent) expressed apprehension about addressing financial responsibilities in adulthood. A staggering 69 percent maintained that the escalating costs of higher education have influenced their decision on whether to pursue a college education. The study also found that 41 percent of the teenagers surveyed lack financial education in their schooling, raising questions about what they could currently be learning that will affect their future financial situations and overall adult lives.
Several financial topics can be introduced to your teenagers, but inundating them with all this information could lead to loss of interest. For this reason, it is important to focus on fundamental lessons they need to learn. Here are ten topics that may help get the discussion going.
**Budgeting**
Introducing your teens to budgeting early can greatly aid their ability to handle money wisely. Teach them to log their income and outgoings, and highlight the significance of not exceeding their earnings.
The practice of dividing their finances into categories like savings and expenditure can help them oversee their money, particularly if they have a financial objective.
**Saving**
Promote the saving habit. By helping them understand that setting aside a portion of their earnings before spending on anything else is a wise move. Starting a savings account can make the process engaging for them, especially when they have a specific goal they’re working towards.
**Emergency Fund**
Educate your teenagers about the importance of having an emergency fund to cater to unexpected expenses like medical emergencies or sudden loss of income. An emergency fund can provide a safety net and peace of mind during tough times.
**Investing**
Introduce the basics of investments like shares, bonds, and collective investment schemes. Teach them about compound interest and its role in long-term financial growth. Encourage learning and research into this topic, using resources such as books, courses, and webinars.
**Debt Management**
Explain the potential risks and responsibilities that come with borrowing money. Educate them about credit cards, interest rates, and the importance of timely bill payments to avoid debt accumulation,.
**Credit Scores**
Teens should learn about credit scores early, as these become relevant earlier than most realize. Understanding how credit scores can affect various life decisions like renting or buying a house, renting an apartment, or purchasing a vehicle can lead them to adopt better financial habits early.
**Needs vs. Wants**
Teach them the difference between necessities and luxuries. Encourage them to prioritize necessities. Open and honest discussions can help them understand they don’t always require pricey upgrades.
**Financial Goal Setting**
Setting financial goals can give them a clear target to aim for, such as saving for a car, college, or a vacation. Keeping goals measurable and achievable helps keep their eyes on the end result, which can be a great motivator.
**Work and Earnings**
Introduce them to the concept of employment and earnings. Emphasize the relationship between efforts and income to instill the values of hard work and financial responsibility.
**Understanding Taxes**
Introduce them to tax concepts, such as income and sales taxes, and explain how these impact their finances. Make sure they understand what taxes are, their purpose, and how they’re used to fund public services.
Share your own financial lessons with your teens, creating open discussions about your financial experiences.
