A survey conducted in February 2022 regarding Teens & Personal Finance showed that 54% of the participating teenagers felt inadequately prepared for financial lessons they ought to learn as adults. The rising costs of higher education, affecting their decisions on college attendance, worried 69% of the respondents. Moreover, four out of every ten teenagers (41%) reported a lack of financial literacy education at school. This makes one ponder about the necessary financial awareness that can impact young adults’ finances and lives.
Several financial topics can be discussed with teenagers, yet an overload of information runs the risk of fostering disinterest. There are, however, fundamental lessons that merit attention, and here are ten such topics worth broaching:
1. BUDGETING: Instilling budgeting habits in your teens, irrespective of their expenditures, can guide them in managing their income responsibly. Teach them to monitor their income and spending and emphasize the significance of living within their means. Categorizing their money into sections like savings and spending can help them visualize their finances, especially if they’re aiming towards a specific financial goal.
2. SAVINGS: Promote regular savings by explaining the notion of setting aside a percentage of income for savings before any expenditure. Opening a savings account is a promising first step.
3. EMERGENCY FUND: Introduce the concept of maintaining an emergency fund, which can be a safety net during unforeseen circumstances like health emergencies or job loss.
4. INVESTING: Familiarize them with basic investment knowledge, discussing options like stocks, bonds, and mutual funds. Impress upon them the value of compound interest and long-term financial growth.
5. DEBT MANAGEMENT: Discuss the risks and obligations of borrowing money. Highlight the importance of paying timely bills to prevent mounting debt.
6. CREDIT SCORE: Teach teenagers about credit scores and their influence on various life aspects, such as renting a house, buying a car, etc.
7. NEEDS VS. WANTS: Encourage teenagers to differentiate and prioritize needs over wants.
8. FINANCIAL GOAL SETTING: Inspiring teens to set financial goals can enhance their determination for financial growth.
9. WORK AND EARNING: Imparting knowledge about working and earning, highlights the link between effort and income and instills a strong work ethic.
10. UNDERSTANDING TAXES: Finally, give your teens a preliminary understanding of taxes, their purpose, and how they affect their earnings.
By passing on these financial lessons, your teens will be well-prepared for their journey into adulthood.
