Financial Literacy for Teens: Preparing the Next Generation
In today’s fast-paced financial world where everything is becoming more complicated, financial literacy is more important than ever, especially among the younger generations. Understanding money management is a crucial life skill that teens need in order to make the best financial decisions for themselves now and in the future. As a parent, it is important that you equip your children with the knowledge and tools they need for success, and helping them have a strong financial foundation is a big part of this. To help you prepare yourself to best provide your children with the bright future they deserve, take a look at some of our top tips to parents for teaching their teenagers financial literacy—
Find a Jumping Off Point and Start with the Basics
Before you get going, it is important to first ask your teen what they already know. Have they learned about money management in school at all? What do they know about the different kinds of accounts? Do they know how to create a budget? Once you have an understanding of what they already know, meet them where they are. Go over the basics with them, i.e., budgeting, saving, checking, how their future paychecks may work, etc. Make sure they have a solid understanding of these basic concepts first before you move on to anything else.
Use Real-Life Examples
One of the best ways to truly learn financial literacy is to understand it through real-world examples. When you want to introduce a financial concept to your teen, think of how you or someone you know has experienced that concept. Want to talk about the importance of saving? Explain to them the process of how you bought your first house. Is budgeting next? Consider showing them a budget you made for yourself in the past and explaining how it was helpful and things you could have improved. You can explain it using theory and general terms all you want, but in the end, real-life situations and examples will be the best teachers.
Include Them in Family Finances
Having the background knowledge of how the personal financial world works is important, but to really instill this in your teens, try including them in the family finances. Take them with you when you go to the bank and show them how it all works. Include them when discussing your family budget. Give them a say in family financial decisions such as planning for vacations, buying new cars or major appliances, or moving. This way, they will understand exactly how their financial knowledge applies to the real life in front of them and be better prepared to take on financial responsibility.
Give Them Experience
Once you feel that your teen is sufficiently financially literate, it is time for them to use this knowledge. One of the best ways to do this is to help them set up a checking or savings account. This may be especially helpful if they are working their first job and earning their first paychecks. Let them start to safely make some of their own purchases using their own debit card. This will be their first concrete financial experience that belongs to them and them alone, so be sure that they understand the responsibility. This is one of your teen’s first real adult experiences—celebrate it with them.
A strong sense of financial literacy can make a huge difference in how well your teen is prepared for the future. While there are many things they will have to learn on their own, this does not have to be one of them. Let 1st Advantage Bank help you teach them with our Grow With Us Youth Checking Account option. This account type is tailor made for children and teens under 18 to learn how to manage their money with features like safe and convenient online banking, person to person payments, easily accessible eStatements, digital wallet access, and more. There is no minimum amount required to open one of these accounts. Whether it is their first checking account or an upgrade from a previous one, this option is the ideal account for the young person learning about their personal finances. Let us help you give your children the best possible financial start. Member FDIC and Equal Housing Lender