Looking for more resources to help your kids become financially savvy?
Click here to read Part I of our “Smart Kids, Smart Money” series.
If you tuned into the first segment of our “Smart Kids, Smart Money” series, you already know that good money habits start at an early age. If you have teenage children, there’s a chance they’ve absorbed a great deal of information about managing their finances by following your example.
Even if you’ve already laid a solid foundation for helping your child achieve a bright financial future, it’s essential to reinforce and build on those concepts throughout their teen years. The teen years bring greater independence, preparations for college and a myriad of other important milestones that will start your kids on the lifelong, practical journey of learning how to handle their money.
Here are a few more tips to help your young adult start this journey on the right foot:
1. Encourage your teenager to work
The experience of getting a job and earning a paycheck can be incredibly empowering for your teenager. Many teenagers get their start in the working world by babysitting, doing yard work, shoveling snow and counseling at summer camps. While some teenagers may be proactive about finding a job on their own, others may require some help the first time around — and this is where you can facilitate.
Be your teenager’s advocate, find out what she is interested in doing and help her advertise her services by word of mouth or on message boards among your friends and neighbors. If your child’s school schedule or extracurricular activities don’t allow her to have a regular job, you can pay her for doing chores around the house.
If your child has a smartphone, both of you can use the iAllowance app to help keep track of chores that are finished, send reminders and set chore goals.
2. Give your teenager the lowdown on bank accounts
When is the right time to open a bank account for your child? There is no right answer to this question — some parents wait to start savings accounts for their children until they’re older, while others open accounts for their children while they’re young and wait to introduce them until they’ve matured. In line with the “save, spend and give” concept that my colleague Jordan highlighted in Part I, you can help instill the habit of saving early on by encouraging your children to save a percentage of the money they earn from work or receive as gifts from relatives.
Typically, checking accounts are more appropriate for children that have regular jobs or are in college. Many banks offer reduced fees if a child’s checking account is linked to her parent’s account, so ask your bank if this option is available to help ensure your child’s account doesn’t include high fees that will eat away at her balance.
3. Engage your teenager in discussions about college financing
Each family’s situation is different, but if college is on the horizon for your young adult, consider engaging her in discussions about paying for college, as a family.
If you’re applying for financial aid for your child, encourage her to work with you to fill out the applications. Showing your child how you approach this important task — collating information from tax returns and financial statements — can be a hands-on way for her to learn about finances.
Not all parents feel comfortable disclosing their financial situation to their children, and that’s okay. But the more you engage your children in the application process, the more likely they are to value and make the most of their college education.
4. Tap financial literacy resources for teens
Teaching by example is certainly the most effective way to impart financial knowledge to your children, but it might also be helpful for your child to hear thoughts about finance from people other than you. Some schools offer financial literacy programs that teach several important money concepts. We’ve also collected a few suggestions for financial literacy websites and books that your teenager might like:
— TheMint.org: This website is designed for multiple age groups and offers a variety of interactive resources and practical tips for handling money.
— TeensGotCents.org: A personal finance blog for teens by teen Eva Baker.
— “The Teen’s Guide to Personal Finance” by Joshua Holmberg: This book starts with the basics, illustrating essential financial concepts that every teen should know.
— “The Complete Guide to Personal Finance for Teenagers and College Students” by Tamsen Butler: From budgeting to saving for college, this book covers creative tips and strategies for helping teens achieve a range of financial and life goals.
When it comes to finances, every family is different; there are no one-size-fits-all recommendations for how to teach your kids about money. No matter how you choose to broach the topic, maintaining a dialogue about your family’s approach to finances can be an important building block for helping your teenager develop a healthy relationship with money.