The February 2022 Teens & Personal Finance Survey found that over half (54 percent) of teen respondents felt they lacked readiness for financial responsibilities that come with adulthood. A significant 69 percent asserted that the escalating costs of higher education affected their decision on whether or not to pursue a degree.
The study also revealed that 41 percent of teenagers were not receiving any education on financial literacy at school. Therefore, it is not unfathomable to ponder what financial lessons young people can grasp now that will positively influence their future monetary circumstances and overall life.
There is myriad content about finance that you can discuss with your teenager. However, delving too deep into every topic could risk losing their interest. Nonetheless, certain fundamental lessons are worth teaching. Here are ten vital subjects that serve as an excellent starting point for such discussions:
1. Budgeting: Inculcating the habit of budgeting in your teen, regardless of their limited expenses, can encourage mindful handling of their funds. Demonstrate the process of tracking income and expenses, laying stress on the significance of adhering to their financial limits.
2. Saving: Cultivate a saving habit in your teenager. Explain to them the idea of prioritizing savings by setting aside a portion of their income before any other expenditure.
3. Emergency Fund: Equip your teenager with the knowledge of building an emergency fund, which could be a financial lifesaver during unforeseen circumstances such as sudden job loss or medical emergencies.
4. Investing: Enlighten them about the basics of investing. Discuss investment vehicles such as stocks, bonds, or mutual funds, and the advantages of compound interest and long-term financial growth.
5. Debt Management: Highlight the implications and responsibilities of borrowing money. Discuss the use of credit cards, interest rates, and timely bill payments as measures to prevent debt accumulation.
6. Credit Score: Illustrate the concept of credit scores and their influence on important aspects of life, like renting an apartment, buying a home, or a vehicle.
7. Needs vs. Wants: Help teens distinguish between essential expenses and luxurious indulgences. Encourage them to prioritize needs over wants.
8. Financial Goal Setting: Indulge them in setting financial goals to motivate them to save towards future expenses like buying a car, paying for college, or planning a vacation.
9. Work and Earning: Instill a strong work ethic and financial responsibility in your teenager. Make them understand the correlation between effort and earning.
10. Understanding Taxes: Empower them with basic knowledge about income taxes and other deductions. Convey the crucial role of taxes in public services funding.
To boost their financial literacy, consider sharing your own tried and tested financial wisdom with your teenager. Get started today!
