The Teens & Personal Finance Survey conducted in February 2022 revealed that 54% of participating teenagers lack confidence in managing future financial challenges as adults. Furthermore, 69% of the participants were influenced by the escalating costs of higher education when considering whether to pursue collegiate studies.
The study also highlighted that 41% of the teenagers received no financial education in their schools. This raises concerns about the kind of financial literacy adolescents are developing currently and how this could affect their economic stability later in their lives.
There are numerous financial matters we can discuss with teenagers, but bombarding them with too much information might bore them. Consequently, it’s advisable to focus on the most important lessons. Here are ten critical financial topics to help initiate discussions:
BUDGETING
Start by training your teenager about budgeting, irrespective of their existing expenditures. They need to understand the essence of tracking income and expenses, and living within their means. Make them understand the significance of splitting money into different categories such as savings and spending.
SAVING
Promote the practice of saving money. Teach them the essential concept of ‘paying themselves first’ by diverting a part of their income to savings before they start spending. A savings account could be a useful aid for this practice.
EMERGENCY FUND
Explain the importance of having an emergency fund. An emergency fund is useful in times of unexpected expenses like medical emergencies or loss of job. Aim to have at least three to six months of expenses saved in a high-yield savings account to ensure financial safety and peace of mind.
INVESTING
Educate them on the basics of investment, such as stocks, bonds, and mutual funds. Expose them to the power of compound interest and long-term financial growth.
DEBT MANAGEMENT
Acquaint them with the responsibilities and risks tied to borrowing money. Illustrate the relevance of credit card payments, interest rates, and timely payment of bills to dodge debt.
CREDIT SCORE
Educate your teenagers about credit scores, which influence various aspects of their life, such as renting a house or buying a car. Explain how they can build and maintain a good credit score.
NEEDS VS. WANTS
Guide them to differentiate between needs and wants. Encourage them to give priority to needs over wants to help them make wise financial decisions.
FINANCIAL GOAL SETTING
Motivate them to set financial goals that can keep them focused on their financial ambitions, whether they are short-term or long-term goals.
WORK AND EARNING
Instilling a robust work ethic and helping them understand the correlation between hard work and income is a yearning.
UNDERSTANDING TAXES
Equip your teenager with a basic understanding of taxes, how they impact their finances, and why they are crucial for funding public services.
We hope these discussions bring up new awareness and knowledge about handling finances in your teens.
