How To Teach Teens about Personal Finance

Teaching teens about personal finances is one of the most important duties parents have.  According to a recent Charles Schwab survey titled Teens and Money only 30% of teens believe their parents/guardians are concerned with making sure they are learning the basics of personal finance.  64% of teens reported they would rather learn about money management through experience rather than in the classroom.  When parents take the time to teach their teens basic money management skills the education can prevent financial hardship down the road.  Side benefit: parents can learn something too!

Teach Value of Money
Weather your teen gets money from a job, or an allowance they should be able to make the connection between work and income.  It’s easy for teens to ask parents for money and then spend it thoughtlessly, but when they have earned the dollars through their own efforts they will have a better appreciation of it.

Teach Savings
One of the most valuable lessons to teach teens is how to save a portion of their income.  Get your teen into the habit of saving for purchases or investing.  This practice will teach discipline and the benefits of delayed gratification.

Teach Budgeting
Helping your teen calculate his expenses now will get him in the habit of tracking his expenses as an adult.  Allow your teen to be financially responsible for certain things in his life.  For example, gas, cell phone bill, entertainment, and clothing.  Only 14% of teens in the survey said they were involved in paying household bills.  Allowing teens to be involved in this area helps them see realistically how far money goes.

Teach about Credit and Debit Cards
Learning about the responsible use of a credit and debit cards can help teens build a strong credit history and learn to pay bills on time.  The ease of using a credit or debit card can be a financial disconnect for teens.  Fees, interest rate hikes, and overdraft charges are traps that teens need to learn how to avoid.  Credit card debt has caused financial ruin for many adults, but it does not have to be that way for your teenager.

Teach Investment Strategies
It does not take much money for teens to start investing.  If you are unfamiliar with investing strategies this is a great opportunity to learn together.  There are many, online and offline resources available to help start your teen with some simple investing that can pay off big later. 

Teach Confidence and Discipline
Teaching your teen about personal finances and money management now will build confidence and disciple.  Knowing the value of money, saving, budgeting, and investing is sure to put your child ahead of the class.