Tim Connolly

Financial Literacy for Teens: Learning the Basics

Posted on May 5, 2022 by Tim Connolly

The United States may be one of the richest nations in the world, but only a little over half of U.S. adults are considered financially literate.

Few states have mandatory classes in personal finances for high school students, which means it’s often up to parents to teach teens about money and to give them a good foundation for financial literacy. Here are some pointers about financial literacy for teens to help prepare for financial independence.

Understanding how bank accounts work

If you’re a teenager who doesn’t have a bank account yet, talk to your parents about opening one and using it as a tool for discussing personal finances. Teens should understand that a bank account is more than just a place to store money.

There are often fees for using the account and, in the case of a savings account, interest paid to the account holder. A bank account can also lead towards getting a secured credit card once there’s a sufficient account balance.

Understanding compound interest

Having a good grasp of compound interest is fundamental to financial literacy, yet one third of adults in the United States have a poor understanding of it. Simply put, whether you’re talking about a savings account or a credit card, when interest is applied to money, that interest will also have interest applied to it. Over time, the value of the money can grow exponentially.

However, compound interest also applies to debt. If you owe money on a credit card, for example, the compound interest applied to what you owe can quickly exceed the amount you originally borrowed.

Understanding why credit scores are important

Any high school student who has taken an exam or brought a report card home realizes that our society uses scores to measure merit. So even if you don’t benefit from having a good credit score today, you can understand it will be important in the future when you want to buy a house or a car.

Every time you borrow money, the lender records how well you have paid it back, which counts toward your credit score. When you want to borrow more money, the lender will look at your credit score to help decide whether you’re a risk worth taking. The lender can also use your score to determine how much interest to charge you.

Learning how to balance a limited budget

Sooner or later, everyone learns to live within their means. As a teen, learning to live within a limited budget now can avoid the transition that often accompanies going out into the world. A good way to do this is to create a budget from an allowance or summer job.

If you don’t have a source of income yet, ask your parents about giving an allowance for specific items, like clothing and cell phone bills, rather than paying for those items themselves. Using a budget will teach you that any purchase, such as a new phone, will most likely require a sacrifice in other spending to make up for it.

Learning how to pay yourself first

The importance of saving money for the future is a lesson that will pay off for decades to come. If you have an allowance or a part-time job, talk to your parents about starting a savings account specifically for saving towards a long-term goal, like going to college or buying a first car.

Then, at each payday, put a percentage of that money into the account. Your parents might even consider illustrating that saving money makes money by matching any contributions you make to that savings account.

Regardless of how you approach the topic of personal finance, discuss any decisions or issues with your parents first before making financial decisions.

FINANCIAL LITERACY FOR TEENS

Posted on May 5, 2022 by Tim Connolly

The pandemic has presented many new opportunities for parents to be involved in their children’s education and teach kids about money. Although teaching fractions with baking, historical reenactments of history in the living room, and science experiments in the backyard are fun, this is also a great opportunity for parents to offer some practical and beneficial learning about financial literacy, especially with teenagers.

YOUNG ADULTS ARE UNPREPARED TO MANAGE THEIR FINANCES

According to the National Financial Educators Council annual survey, only 24% of student respondents, and 20% of parents, say that students are prepared to deal with real-world financial challenges.

That means more than 75% of young adults have some sort of fear and confusion about earning money, handling finances, and creating good systems that will help them throughout their lives.

4 FINANCIAL LITERACY SKILLS FOR TEENAGERS

Below are some tasks that are important for everyone to know how to do, and can help start the conversation with your teen. Introducing them to terms and paperwork that you wish you’d known at their age will help give them the confidence and knowledge to act in their best financial interest.

Yes, these ideas might get you some eye-rolls and long-suffering sighs, but if you help your child become familiar with these concepts in adolescence, you will be helping them take a huge step toward adulthood and financial literacy.

1. CREATE A BUDGET

Most adults aren’t great at budgeting, as evidenced by year after year of failed New Year’s Resolutions. Reviewing your household budget with your child now is a great way to help them manage their finances in the future.

Have your child create their own budget: If your child is currently working or has a source of income, help them create their own budget and discuss with them the amount of money that goes into each category. Be sure to include savings, giving, and an entertainment budget.

Research college costs: For older kids headed to college, have them research apartment rent around the schools they’re thinking about. How does that compare to what the cost of a dorm would be? Will they take (or need) a car? What about food and books?

Budgeting isn’t a glamorous process, but if you can get your teen into the habit before they leave home, they will have a head start for the rest of their lives.

2. GO OVER YOUR W-2

Tax forms are confusing, especially if you’re new to the workforce. We only see them once a year and for many people, they are a trigger to one of the biggest adulthood stressors — taxes.

Becoming familiar with these forms and what they mean now, while they have you as a resource, will give your child a running start in personal finance, and will give you some peace of mind about their abilities.

3. TAXES

You and your teen have gone over most of the forms needed to finish your taxes, so the next logical step is to complete them.

Tax Software: If you fill out your taxes on your own, or use a software program, walk your teen through using it, especially if they have a part-time job, or have been gifted investment accounts in their name, and have to prepare taxes themselves.

Gather Documents: If you use a tax preparer or an accountant, gather all your documents and show your child what the preparer will ask for, how you organize documents, and how much it costs to have your taxes done.

Track Your Refund: Close the loop by either having them help pay the IRS (if taxes are owed) or checking your bank account for your refund and discussing what you’re going to do with that money. Make sure to emphasize savings for at least some of it!

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5 Common-Sense Money Management Tips for Teens

Posted on May 5, 2022 by Tim Connolly

A successful financial future is easiest to build on a strong foundation. If you have a child in their teens or pre-teens, try these five common-sense tips for providing financial education to kids to set them up for success.

How to Help Your Child Manage Their Money as a Teenager

1. Open a savings account sooner rather than later.

Encourage your teenager to open a savings account if they don’t already have one. This is especially useful if they have a part-time job. That way, they’ll have a safe place to store their newfound income and earn interest while they’re at it.

When opening a banking account as a teen, they may need someone over 18 to be on the account with them, so it’s the perfect opportunity to take them to the bank and help them through the process.

First, though, discuss with them how much they’d like to put in their savings account. Look at the minimum deposit amount at your bank of choice and then go from there.

2. Open a checking account to get a debit card.

A debit card is sort of like a credit card with training wheels. It’s a good way for your teen to practice handling virtual money. Once they’re experienced with spending money with a card instead of cash, they’ll be much better prepared for when they get a credit card after age 18.

Most banks offer debit cards with checking accounts these days. Have them open a checking account to start practicing using a card, as well as managing their accounts online.

3. Create a simple budget.

Budgets are only as complex as you make them. As a teen, your child will likely not have many monthly expenses and a relatively uncomplicated source of income. This is the perfect time to sit down with them and create a budget together.

When creating a simple, realistic budget with your child, start by totaling income sources such as allowance or part-time job wages. If they make extra money doing things like babysitting or refereeing on the weekend, be sure to account for that. Then, have them subtract from that their monthly expenses—including contributions to a savings account and miscellaneous spending money.

4. Give them online resources to explore on their own.

Some teens prefer to learn things on their own rather than from their parents. Luckily, there’s a whole world of reliable online resources to help them learn about money management.

We also have a resource for you, their parent or guardian. Money, as You Grow from the Consumer Financial Protection Bureau, has tips to help you teach your teens everything they need to know.

It can be narrowed down by topic, like buying a car or paying for college, and has sample questions and answers you can use when explaining things to your teen.

5. Sort out wants from needs.

Here’s one last tip for setting your teen up for long-term financial health. It’s a simple one—have them make a list of their wants and their needs.

It’s such a crucial step to money management, but often it can be overlooked by young teens in the excitement surrounding their first paycheck. Before they spend it, have them make a list of things they want versus what they need, then compare that to their budget. This way, they’re more likely to come to their own conclusions that perhaps certain “needs” are actually “wants” when they see their paycheck start to shrink.

teaching teens, Teaching Teens About Money

Teen Money: A Guide for Teaching Teens Money Management

Posted on May 5, 2022 by Tim Connolly

One of the best life lessons parents can give is teaching teens about money. So many of us grow up without having an idea about how to make the most of our checking account, how to save for attainable goals, or how to budget and consider taxes.

Teaching your teens how to manage money from an early age can prove to be hugely beneficial.

But what should you do if you notice that your teens seem to be a bit more flush with cash than they should be?

Is your teen obsessed with the idea of making and getting more money?

Have you or others started to notice that money or items are now missing from your wallet or home?

Establishing good money habits as a teen

With a solid financial foundation, your teen will be in an excellent position to approach adulthood with a healthy idea about what it means to earn a living, save for goals, and manage their money.

These habits can start early, with some of the following:

Setting up a checking and savings account.
Teaching them how to manage their money using their banking app.
Reminding them of the importance of setting money aside for a rainy day.
Teaching them the importance of budgeting and paying bills on time.
Helping them to understand the benefits and pitfalls of credit, credit cards, and loans.

It’s also important to mirror the healthy financial habits that you are teaching your teen. If you’ve made mistakes, be sure to tell your teen what lessons you learned and how you worked to fix things.

Recognizing signs of financial trouble

Your teen is sure to start to get the idea of just how important money is. After all, he won’t get the things he wants if he doesn’t have the money to afford them.

For some teens, this can motivate them to work more hours at their part-time job or pick up extra side gigs to earn more money. However, for other teens, it can lead to the idea that there must be an easier way to get the money that he wants.

Recognizing the signs of your teen starting to form an unhealthy relationship with money is an important part of keeping him on the right path.

Ask yourself a few questions if you suspect your teen may have an unhealthy relationship with money:

Is your teen obsessed with high-end clothing, shoes, and other expensive items that should be out of financial reach?
Does your teen seem to spend a lot of time comparing their lives and lifestyle to those of musicians, actors, and even influencers?
Does your teen have unrealistic wish lists for birthdays and holidays?
Do they buy things impulsively? Even when they can’t afford to get it and also pay their bills?
Does your teen refuse to help around the house unless they are paid to?
Is your teen showing signs of anger and frustration when they can’t get something they want?

Teens who have an unhealthy mindset about money and material things can also soon lean into stealing as a way to get what they want. Stealing can extend further than just taking a few dollars out of their parent’s wallets. There can be some serious legal consequences.

Why teens steal

Teens could be stealing for any number of reasons related to their wanting to get more money. It can vary greatly, with some teens stealing simply for the thrill of it.

Peer pressure can often be to blame for a fair amount of the negative behavior that we see in teens. They may feel like they won’t fit in with their friends if they don’t have the latest iPhone, the latest game for their gaming console, or the trendiest clothes. This can drive your teen to use any means necessary to get what he wants.

Teens who are engaging in risky behaviors, including taking drugs and drinking alcohol, may turn to stealing so that they can afford to keep up with their expensive new habits. They may also lie about where their money is going when they are pressured.

Your teen could also feel a level of embarrassment to ask you for money for some of his expenses. Condoms, pregnancy tests, as an example, can be embarrassing for a teen to buy or ask their parents for help buying. They may steal to avoid needing to face uncomfortable questions.

Some teens steal and lean into risky behavior because they enjoy the way they feel when they’re getting away with something. They want the extra money but also enjoy knowing that they’ve outsmarted those they’ve stolen from.

The consequences of stealing

As an adult, you know that you face serious consequences if you take even a paperclip from an office supply store. Moral compass aside, the fear of fines, jail time, and other legal fallout can often be the primary reason that people simply don’t steal. Teens may be under the impression that they won’t face severe consequences if they steal due to their age.

The reality is that many cities, counties, and states will have different rules for teens. Your teen could be at risk of facing the same consequences as an adult would, including:

Large fines paid to the courts and to those they stole from.
Large legal fees.
Time in jail or a juvenile detention facility.
A permanent criminal record that will impact their future.
Suspension from school. They may also be expelled.
Loss of trust from friends and family members.

The consequences of your teen’s bad behavior could also impact your financial stability and your future. You may find yourself needing to spend money you don’t have on legal fees. You could also find you need to take time away from work to deal with the consequences of your teen’s poor behavior.

What can you do to help your troubled teen?

Outside of educating your teen about the importance and true value of money, just what can a parent do to help their teen?

A few options include:

Counseling can prove beneficial for teens who are struggling. Quite often, their struggles extend beyond their need for more money. Addressing mental wellness concerns can help immensely.

Let your teen feel the brunt of the consequences they face. As a parent, it’s natural to want to protect your teen, but when it comes to something as serious as risking their future for a few extra dollars, they must understand the true magnitude of their issues.

Teach Teens, Teaching Teens About Money

Teens And Personal Finance: Tips For Teaching Teens About Money

Posted on May 5, 2022 by Tim Connolly

1. Acknowledge that your teen thinks you don’t know anything.

“When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But, when I was twenty-one, I was astonished by how much he had learned in seven years.” Mark Twain

Most children, for some period during their teenage years, are reluctant to take advice from their parents. That is a natural part of the growing up and out process.

My four children were no different. When I tried to initiate conversations about how I made money (in those years that I did), they were, at best, polite. But, these infrequent flashes of curiosity ended as quickly as they sparked.

So, I decided on a new tact: asking friends with business expertise to speak to my kids instead. That’s right; I set up little engagements with contractors, bankers, and money managers … and, my kids.

And Bill would explain how he bought materials, hired subcontractors, negotiated with landowners, borrowed money and so on. And, my kids responded with interest and good questions for Bill, as well as for my friend the banker and my friend the money manager.

Teenagers are interested in money. They know that they need it and want it. Since they will, at times, pull away from parental guidance, bring in your friends. And, you can do the same for your friends’ children.

2. Turn the abstract into the specific.

Kids get enough schooling in school. To get through to them, drop the lecture and deal in specific, relevant examples of personal finance.

One year, I sat all my kids down and explained that I was about to enter a real estate deal. I offered each of them a very small partnership interest, and I told them that they needed to understand the deal so that if something happened to me, they would know what to do.

Their first inquiry (of course) was the amount of how much they were going to make. I explained that this answer depended on several factors. They wanted to know more about these “several factors.” No longer was my talk just, “blah, blah, blah.” They now had a self-interest, and they paid attention to my responses.

The hour-long discussion that followed was one of the most productive I ever had with my kids. We covered mortgages, contracts, lawsuits, partnership agreements and a couple of other topics. I think they enjoyed it; I know I did. And, what’s more, I think they walked away from our get-together with a slightly better understanding of some basic financial principles.

There are a lot of ways to turn an abstract point into a specific example. If you want to get through to your teenager, look for these opportunities.

3. Educate yourself.

When I started writing about and teaching kids about money, I realized that there were many concepts I thought I understood … but, really didn’t. There is no better way to find out if you understand something than by trying to teach it.

For me, I never really understood mutual funds as well as I should have. So, before speaking to my kids about these investments, I spent an hour and learned all that I could. While I am still no expert, I knew more than they did and could handle most of their questions adequately.

Fortunately, I have a friend who is a stockbroker, and he gave them a much better explanation at a neighborhood barbecue.

And, more importantly, I told them that I was giving them each $100 to invest in the mutual fund of their choice, and the kid whose fund had the highest value at the end of the year would get an extra $100. In other words, try everything!

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7 Financial Literacy Tips for Teenagers

Posted on May 5, 2022 by Tim Connolly

Have you ever taken a class that taught personal finance or financial literacy? Since money management for children is generally not taught in the school system, your answer is probably no.

However, it’s an essential element to a well-balanced life, which means it should absolutely be part of any teenager’s education. So, if your school isn’t going to do it for you, you’ve got to do it yourself.

Start your education today and check out these seven financial literacy tips for teenagers.

1. Learn About Budgeting. If your parents use a personal budget, start off by asking them for some advice. If you’re working and bringing in money yourself, try it out at a free website like Mint. Even if you’re not yet responsible for any monthly bills, you can still learn the process and the value of maintaining a budget. Input your numbers and see where you come out. If you find that you’re spending more than you’re earning, try making some changes to your purchasing habits.

2. Save a Portion of Everything. Start by opening a savings account if you don’t already have one – if you’re under 18 you may need your parents to co-sign or open one for you. No matter what kind of money you receive, whether it’s a birthday check from a relative, a cash gift from mom or dad, a paycheck, or even your weekly or monthly allowance, hold onto a portion of it. Even if you only devote 25% of your income to savings, you’re doing yourself some good.

3. Find Better Deals. Whenever you want to buy something, check first to see if there’s a listing on eBay or Amazon at a lower price. For even more opportunities, sign-up for email updates from FatWallet or SlickDeals and get a list of special pricing on various products sent to your inbox each day.

4. Start Building and Improving Your Credit Score. If you have no credit history and can’t get a traditional credit card, sign-up for a secured card, which is backed by your own money. Use it to make small purchases and pay off the balance on time and in full every month.

When you do get a credit card, commit to never carrying a balance on it. Your credit score is golden: It affects things like interest rates for car loans and home mortgages, auto insurance premiums – and some employers even factor it into their hiring process. Start building or improving your score today.

5. Understand Wants and Needs. Right now, your needs are essentially taken care of by your parents – things like food, shelter, and basic monthly services such as gas and electricity. Everything else you have your eye on is a want. This lesson is going to make a lot more sense down the road, but in a nutshell, you should always try to reduce the costs of your needs as much as possible, and eliminate or hold off on as many wants as you can.

6. Forget About Peer Pressure. Ever feel the pinch because your buddy has the latest smartphone and you don’t? Forget about it. If you’re teased or made fun of, ignore it. Peer pressure and spending money have no business together, and if you’re shelling out yours just to appease your acquaintances, you’re not doing yourself any good.

7. Start Earning Cash Now. There are plenty of ways to earn cash as a teenager. You could babysit, cut grass, tutor younger kids, or even run errands for older folks in your neighborhood. Try hosting a garage sale, too, if there are a bunch of old, unneeded things in the house. The sooner you start earning money, the sooner you can get a firmer grasp on managing it.

When I was a teenager, my parents taught me one basic, but profound, lesson about money – either you run your finances or they run you. Instead of falling into the perils of credit card debt or making ill-advised purchases, start learning more about money management and how it works today.

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Teaching Teens Financial Literacy Pays Off in the Future

Posted on May 5, 2022 by Tim Connolly

Today’s schools are starting kids earlier in just about every department: math, science, literature, languages, and so many more.

The idea here is that, since children soak up knowledge faster and more readily than adults, it’s best to get the lessons going at an early age so they’re more likely to retain them into adulthood.

In short, taking advantage of wisdom that you learned at age 6 is a lot easier than stumbling onto it at age 26 and playing catch-up with the world. This same philosophy should apply to the financial world as well, particularly savings and budgeting.

Starting Off on the Right Financial Foot

If kids begin the path to monetary carefulness early on, they won’t be so tempted to blow all of their earnings on toys that they’ll never play with, clothing that costs them an entire paycheck, and an overall lifestyle that they can’t afford.

This is backed up by a recent study conducted by financial literacy organizations EverFi and Higher One. They took 65,000 college students, some of which took a financial literacy course in high school and some who did not.

They were all given a survey of their financial habits, and the ones who studied basic finance in high school proved to be far more responsible with their cash than the ones who did not.

This shows that, even though they don’t always seem to be doing so, kids do pay attention to what people tell them. So, if you teach them from an early age to not carry too many credit cards, to not buy things that they can’t afford, and to set up a budget that tracks everything that they give their cash to, they’ll probably abide by those rules for the rest of their lives.

And yet, the vast minority of kids take these courses, because the vast majority of schools don’t offer them. Right now, only 17 states require that their high schools offer at least one course on financial literacy.

Why the other 33 aren’t interested in doing so is a mystery to everyone. Perhaps they feel that managing money is common sense? Because based on the amount of debt we’ve accumulated and continue to accumulate, clearly it’s not.

Until more schools get with the program, parents should take the time to educate their children on how to manage money, and they can start as early as grade school. It’s actually quite easy to do so.

Make Financial Planning a Family Affair

First, sit them down with you while you work on the family budget and explain, in simplistic terms, what you are doing and why you are doing it.

As long as you steer clear of unnecessary financial jargon, your child is likely to understand what you’re getting at. Using a budgeting system, like the one offered is best for these lessons, as its straightforward setup is easily understood by both children AND adults.

Then, apply this knowledge to their world which, despite being mercifully bill-free, can still be a financially-intelligent one.

Have them do chores or sell something useful (lemonade, cookies, crafts) so they can earn cash of their very own. Then, if they want a hot new toy or game, let them know that they will need to pay for it themselves, with their own money.

Not only will earning the toy through hard work and not just having it handed to them by their loving parents make them feel good about themselves, it will also teach them not to blow their money on cheap junk if they have something bigger and better in mind.

Kids are smarter than you think and are always eager to learn more. So why not make financial education for kids a priority, regardless of what their school system thinks? Sounds like common sense to us.

Effective Money Management Lessons, Healthy Money Habits, Money and Finances

5 Common-Sense Money Management Tips for Teens

Posted on April 24, 2022 by Tim Connolly

1. Open a savings account sooner rather than later.

When opening a banking account as a teen, they may need someone over 18 to be on the account with them, so it’s the perfect opportunity to take them to the bank and help them through the process.

First, though, discuss with them how much they’d like to put in their savings account. Look at the minimum deposit amount at your bank of choice and then go from there.

2. Open a checking account to get a debit card.

3. Create a simple budget.

If they make extra money doing things like babysitting or refereeing on the weekend, be sure to account for that. Then, have them subtract from that their monthly expenses—including contributions to a savings account and miscellaneous spending money.

4. Give them online resources to explore on their own.

Some teens prefer to learn things on their own rather than from their parents. Luckily, there’s a whole world of reliable online resources to help them learn about money management.

That being said, it can be tricky to find a trusted source among the millions of search results.

We also have a resource for you, their parent or guardian. Money as You Grow from the Consumer Financial Protection Bureau has tips to help you teach teens about money.

It can be narrowed down by topic, like buying a car or paying for college, and has sample questions and answers you can use when explaining things to your teen.

5. Sort out wants from needs.

Here’s one last tip for setting your teen up for long-term financial health. It’s a simple one—have them make a list of their wants and their needs.

This way, they’re more likely to come to their own conclusions that perhaps certain “needs” are actually “wants” when they see their paycheck start to shrink.

financial education, financial lessons, Money and Finances

THE TOP 8 FINANCIAL RULES TO TEACH YOUR KIDS

Posted on April 24, 2022 by Tim Connolly

When it comes to our children’s future, providing financial education to kids is one of the most important things we can do. By getting ahead of it and making sure they develop good money management habits, we can set them up for success later in life.

In this blog post, I have breakdown top 8 financial rules they believe all kids should be taught from an early age in order to set them up for success.

Here are 8 financial rules to teach your kids:

1. Start budgeting early.

One of the most important financial rules to teach your kids is the importance of budgeting. Budgeting is a vital skill that everyone should learn in order to manage their money effectively. By teaching your kids to budget early on, you’ll instill in them the importance of mindful spending and saving. There are a few simple ways to teach your kids about budgeting.

First, explain what a budget is and why it’s important. Next, help them create a budget for their allowance or income. Finally, encourage them to stick to their budget by providing financial incentives or rewards. By teaching your kids about budgeting early on, you’ll set them up for financial success later in life.

2. Understand the value of money.

Another important financial rule to teach your kids is the value of money. Many children don’t understand that money doesn’t grow on trees and that it needs to be earned. As a result, they often take their parents’ money for granted and don’t appreciate its value.

Help your kids understand the value of money by teaching them how to earn it and save it. For example, you can have them do chores around the house in order to earn their allowance. You can also help them open a savings account so they can start saving for their future. By teaching your kids the value of money, you’ll help them develop good financial habits that will last a lifetime.

3. Spend less than you earn.

One of the most important financial rules to live by is to spend less than you earn. This rule is especially important for kids to learn because it’s so easy for them to overspend. Teach your kids the importance of spending less than they earn by setting a good example yourself. When you’re out shopping, resist the urge to impulse buy and instead stick to your budget.

You can also help your kids understand this rule by teaching them about needs versus wants. Needs are things that we need in order to survive, like food and shelter. Wants are things that we would like to have but don’t necessarily need, like a new toy or a designer outfit. Help your kids understand the difference between needs and wants so they can start spending wisely.

4. Use credit wisely.

Another important financial rule to teach your kids is to use credit wisely. Credit can be a useful tool when used correctly, but it can also lead to financial problems if not used carefully. Teach your kids about the dangers of credit by setting a good example yourself. For example, only use credit when you can afford to pay it back in full and on time.

You can also help your kids understand this rule by teaching them about interest rates. Interest is the fee that lenders charge for borrowing money, and it can add up quickly if not managed carefully. Help your kids understand the importance of paying off their credit card balances in full and on time so they can avoid paying interest fees.

5. Invest in your future.

One of the best things you can do for your financial future is to invest in it. And this is a rule that you should definitely teach your kids. Help your kids understand the importance of investing by teaching them about the different types of investments. For example, you can invest in stocks, bonds, and mutual funds.

You can also help your kids understand the importance of saving for retirement. Retirement may seem like a long way off, but it’s never too early to start saving. By teaching your kids about investing, you’ll help them set themselves up for a bright financial future.

6. Live below your means.

A good rule of thumb to live by is to live below your means. This simply means spending less money than you earn. It may seem like a difficult task, but it’s actually quite easy to do if you’re mindful of your spending. Teach your kids the importance of living below their means by setting a good example yourself.

7. Delay gratification.

One of the most important financial lessons you can teach your kids is the importance of delayed gratification. Delayed gratification simply means waiting to buy something until you can afford it. This is an important lesson because it teaches kids the value of money and how to budget wisely. When you’re out shopping, resist the urge to impulse buy and instead wait until you can afford it.

Teach Teens, Teaching Teens About Money

Financial Habits Are Learned by Age 7. Here Are 4 Ways to Give Your Kids a Head Start

Posted on April 24, 2022 by Tim Connolly

Your second grader probably isn’t discussing the Fed’s next rate hike. But according to PBS.org, their money habits are set by age seven. Here are four ways you can pique your child’s financial interest and explore the ways of how to teach kids about money.

1. There’s an app for that

Added screen time might not excite most parents, but using that time to build a child’s money mindset should.

With allowance transfers and debit cards, children can learn the value of earning cash and the importance of spending wisely, without facing overdraft fees and other penalties. The best part is that parents have full control over their child’s experience by limiting purchasing categories and reviewing every transaction.

2. Open a custodial Roth IRA

When your child begins receiving earned income, opening an IRA for them is a great learning opportunity. By having an account in their name and funded by their hard work, children will have a sense of ownership as they take an early step toward a secure retirement.

And don’t forget the investments. Encourage your child to research investments and watch them grow to make a lifelong investor. Just remember to diversify their holdings: nothing is more discouraging than watching hard-earned money disappear!

3. Make them your financial copilot

Investing your retirement account? Show them what you’re doing. Running to the bank? Introduce them to the teller. Meeting with a financial advisor? Take them with you; they might even get a sucker. When it comes to a financial education, make it experiential.

A 2018 study found that family communication patterns greatly improve financial knowledge among college students. By opening up about your financial picture to your children, they have added experience when it comes to their own financial future. Learning the abstract is important, but hands-on experience is the best way to foster their interest.

4. Learning in the classroom (yeah, really)

Financial literacy classes in public schools still have a long way to go, but some non-profit organizations are filling the gap. Junior Achievement and the Jumpstart Coalition are two such groups bringing personal finances to the classroom.

As a parent, you have a lot of influence over what is taught in your child’s classroom. Why not check to see if these or other personal finance programs are offered by your child’s school.

If they aren’t, have a conversation with the administration to see how that can be changed. If they are, get involved. Volunteers are always encouraged. When it comes to financial literacy, every parent should be an advocate.