As revealed by a Teens & Personal Finance Survey in February 2022, a majority of teenagers (54%) expressed feeling ill-equipped to tackle adult financial responsibilities. This led to an incredible 69% of teenagers stating that the skyrocketing costs of tertiary education influenced their choice to pursue college.
The study demonstrated that a significant portion of teenagers (41%) are not receiving financial literacy education in school. Given this, pondering what financial knowledge adolescents can acquire now to benefit their future is necessary.
Presenting multiple financial themes to your teenager might overwhelm them, hence, it’s crucial to impart essential financial concepts without overwhelming them. Here are ten topics to initiate enlightening discussions:
1. BUDGETING: Teach them the importance of a budgeting habit, regardless of their minimal expenses. Guide them on how to monitor their income and spending while emphasizing the necessity of living within their budget.
2. SAVING: Encourage consistent saving habits. Illustrate the principle of “paying oneself first” which means assigning a part of their income to savings before spending.
3. EMERGENCY FUND: Instruct them on the importance of an emergency fund. This financial buffer can help them manage unexpected bills due to medical emergencies or job/income loss.
4. INVESTING: Orient them with basic investment knowledge, such as stocks, bonds, and mutual funds. Instill the understanding of compound interest and the concept of long-term financial growth.
5. DEBT MANAGEMENT: Make them aware of the risks and potentials of borrowing money. Guiding them on using credit cards responsibly, underlining the necessity of timely bill payment to avoid debt is pivotal.
6. CREDIT SCORE: Explain what a credit score is and its consequences on different aspects of their life. Begin a candid conversation about your credit score, how to check it, and defining what good and bad scores are.
7. NEEDS VS. WANTS: Enable teenagers to differentiate between essential commodities and luxuries. Inspire them to place needs before wants.
8. FINANCIAL GOAL SETTING: Building towards a financial goal can provide motivation and a sense of achievement in the financial journey of teenagers.
9. WORK AND EARNING: Equipping them with the understanding of work and earnings is crucial. Emphasize the importance of hard work and earning money.
10. UNDERSTANDING TAXES: Help them understand fundamental tax concepts, including income taxes and sales tax implications on their earnings.
Now, we’d love to hear from you. What financial life lessons have you shared with your teenagers?
