How To Teach Teens About Money

The following guest post is from Ryan, a high school senior who recently began blogging at The Financial Student.

If you have children in high school, you only have a few years left to instill solid financial skills. One of the best ways to do this is to open up your own finances. Instead of hiding your financial information and hoping for the best, consider having an honest discussion with your child about both the good and bad decisions you’ve made with money.

Here are some ways to include teens in your family’s financial portrait:

1. Give them a peak at the family budget. This will actually provide a realistic picture of what it takes to run a household.

2. With discretion, reveal how much money you make. This can be quite an eye opening experience! I honestly had no clue how much money my parents made until I was in high school and it definitely put things in perspective. There’s also little use trying to hide this information; you must reveal your income on your child’s federal application for student aid.

3. Don’t hide your debts, if you have them. By the time kids are in high school, they aren’t oblivious to how stressed you become when the Visa bill arrives. Be honest. Let them you know you didn’t always use credit wisely and explain what you want them to do differently.

4. Don’t be afraid to say no. Of all the things I “had to have” and never got, I don’t remember any of them. I quickly got over my desire or decided to start saving up myself.

5. If you still pay bills by check, let your child write it out. This will include them in your family’s finances. If you’re utilizing online bill pay, you can have them type and click. Currently, I sometimes “pay” our family cell phone bill and the credit card used for gasoline.

6. Let them know ahead of time whether you’re paying for all of, some of, or none of college costs. You don’t want to shock them with news on graduation day that they’re completely responsible for financing their education. Also mention whether or not you would be OK with funding any sort of business endeavor they’ve created.

My own parents have been quite open about their finances and I definitely feel it’s been a positive move on their part. Knowing what they did right and wrong will no doubt help my own finances.

Note from Frugal Dad: I’m impressed by Ryan’s financial awareness at such a young age. I was well into my 20′s before I finally began to wake up to my own financial mess, and it took another couple years to finally take action on improving my situation. Very well done, Ryan – you are well on your way to building significant wealth having identified these concepts so early.

Comments

  1. Great tips, especially if you are a parent and haven’t taught your kids all along!

    My oldest in 9, and he has his own bank and stock accounts. I’ve made it a point to educate him myself so he know the financial world well at an early age.

    I didn’t have any financial training as a child, and was floundering initially when I was in college. I don’t want my kids to have to learn finances on the fly… Especially when they are in college and vulnerable!

  2. My kids learned to save 20% before they learned table manners. Coming from a home that discouraged talk about money I’ve committed to the opposite but always questioned the decision. Ryan gives me more confidence I am heading the right direction.

    Nice job!

  3. I have a newborn daughter, and I have been thinking how I would talk finances with her when she’s 5, 10, 15, and 20.

    I never talked to my parents about how much they make. Even in college when I filed my FAFSA, I only saw half the story, my mom’s income. My mom and dad are divorced. I never saw a mortgage payment, and I never saw an electricity bill.

    Actually, an interesting story comes to mind: I just bought a house and was talking to my mom about how my electricity bill was high (>$100/month). I told her that I was going to work hard to get it below $80/month. She laughed and said she’s never seen a bill below $200. If I had known this growing up, it would have been an eye opener!

  4. When it comes to revealing how much money you make, won’t any amount sound like a lot to a high school student though? Or maybe that’s tempered by showing the costs of things?

  5. I believe that children should be introduced to money issues at an early age – at least certain concepts like budgeting, saving, giving, etc. By the time they are teenagers, they should have a reasonable sense of fiscal responsibility. My daughter (4 years old) already understands the difference between things we need and things we want. Also, I think it’s good to show progression towards a particular goal.

  6. @4,

    Jackie, I don’t think that would sound like a lot to a high school student. Remember, they are already hearing about average salaries for prospective careers.

    And if you couple that knowledge with letting them see the budget, they’ll know that while you might make $2000 in a month, the required expenses eat up $1500 of that (for example)

  7. My son knows about my blog, but decided to venture. Comes out in the living room and says, “we $89,000 in debt?!”. Now he knows. ;)

    BTW, he subscribed to the blog. I am hoping he learns from our financial mistakes.

  8. I commend Ryan and his family for discussing the family finances together. The idea of letting the children write out the check is an excellent one, providing bill paying is not done online. I teach financial literacy to students and I am surprised to learn that many of them do not know how to write out a check or even fill out a deposit slip. This is a basic step in being responsible for your finances. Keep up the good work, Ryan, and please share your information with your friends.

  9. Ryan, thanks for sharing your words of wisdom. My 16 year-old has a decent head for money, but this may be educational especially for the 14 year-old who thinks money grows on plastic cards (unfortunately from my example). Good opportunities to teach them while learning & changing our own financial ways.

  10. I think it should be mandatory to have a personal finance class in high school. Kids never learn how to balance a check book, then they open a bank account and have the debit card and go overdrawn! I think it’s a horrible, viscous cycle. :(

  11. We did the system of having my daughter write out the checks and I signed them, then she saw what came in and what went out, to whom and why.We also did the calendar where as bills came in or monthly bills like house,car could get plotted in.This was so she could get a look at the whole picture, see how I planned for things and earmarked money for projects etc.This must have made a good impression as now she is married and her and her husband both use similiar techniques only with a modern twist.

  12. Glad you guys enjoyed the post!

    @Jackie: You’ve hit the nail on the head. Showing how much expenses add up to will probably be even more shocking than how much a parent makes.

    @Mrs. Money: I agree. We were forced to take a health class that was all but worthless. Personal finance would have been a much better use of time, at least in my high school.

  13. Great Post!
    Have schooled my kids all along about money. Especially the part about not having any.
    It’s great to see how much they appreciate knowing about finances, especially when friends and roomates are over their head in debt. Now if there was an easy way to teach them not to lend friends money.. that would be priceless!

  14. Interesting Advice, my parents taught me a lot about money, and always encouraged me to share about how I was doing. They helped me get my own checking account and I paid for most of my “fun” things post 16.

    Anyway, I appreciate the thought to keep the openness a two-way street.

  15. Nice thread, very relevant. Personally, I think its also important for parents to talk with teens about not just the value of a dollar, but personal finance and investing.

    I remember when I was in high school taking a couple of business courses, the school curriculum rarely focuses (and still doesn’t in a lot of ways) on personal finance matters, and I remember my dad talking to me about what a stock was, its share price, etc.

    Even though it would be a few years before I started investing, it gave me additional confidence that this is what a lot of people do as they plan for retirement.

  16. I did not know what my Dad made until i was 17 years old and i saw his pay-stub by mistake. Though i was not surprised i started having a great appreciation of what he used to provide for us. I wish he had shared that with us earlier.

  17. There is something for all of us in this. I remember when I was in the Boy Scouts and I was in the process of earning my Personal Finance merit badge. I had a talk about finances with my Dad. He revealved how much money was coming in and how much was going out. Plus he shared what our family’s total net assets were. It was mind boggling to me at 15 years old to grasp how much income a family needed to make ends meet.
    Great insight Ryan!

  18. I’ve put my teen into the habit of saving 20% of whatever pocket money he earns for doing chores around the house or of the money earned working as a waiter.
    He is learning to discipline himself with using his $30 prepaid cell phone straight talk package from Walmart which gives him 1000 any time /anywhere minutes & 1000 text messages – he has to make sure that his airtime lasts the whole month in order to keep in touch with his girlfriend regularly – so he is learning discipline by using his cell phone time sparingly

  19. @Daniel – It seems like those are great ways at getting your teen to learn the value of a dollar while at the same time being able to appreciate some of the good things in life. Good stuff.

  20. Teaching your children at a young age will give them a very valuable life lesson. I took a personal finance class in college, and I really wish they made a class similar to it mandatory for high school students. So many people turn 18 (and able to get credit cards) and don’t have the slightest clue on how to be responsible with them or even student loans.

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