A survey from February 2022 revealed that over half of teenagers (54 percent) feel unprepared for the financial responsibilities of adulthood. Additionally, 69 percent said that rising college costs influenced their decision about pursuing higher education.
The study also found that 41 percent of teens aren’t learning about financial literacy at school. So, it’s crucial to think about what financial lessons can help them positively impact their future finances and overall lives.
It’s easy to get overwhelmed with all the financial topics you can discuss with your teen, but focusing on the basics can be more effective. Here are ten key topics to start with:
1. Budgeting: Teach your teen how to budget, even if their expenses are small. Show them how to track income and expenses and stress the importance of staying within their financial limits.
2. Saving: Encourage your teen to develop a saving habit. Explain the concept of setting aside a portion of their income before spending on anything else.
3. Emergency Fund: Explain the importance of having an emergency fund to cover unexpected costs like job loss or medical emergencies.
4. Investing: Introduce them to basic investing concepts. Talk about options like stocks, bonds, and mutual funds, and explain the benefits of compound interest and long-term growth.
5. Debt Management: Discuss the implications of borrowing money. Teach them about using credit cards responsibly, understanding interest rates, and timely bill payments to avoid debt.
6. Credit Score: Explain what a credit score is and how it affects major life decisions, such as renting an apartment or buying a car or home.
7. Needs vs. Wants: Help your teen differentiate between essential expenses and non-essential indulgences. Encourage them to prioritize their needs over their wants.
8. Financial Goal Setting: Motivate them to set financial goals for things like buying a car, paying for college, or saving for vacations.
9. Work and Earning: Teach the value of hard work and financial responsibility. Help them understand the relationship between effort and earning money.
10. Understanding Taxes: Give them basic knowledge about income taxes and deductions. Explain the role of taxes in funding public services.
To help your teen become financially literate, share your own financial experiences and tips with them. Start these conversations today!