Did you know that in most states, high school students aren’t required to take a personal finance class?
While they’ll certainly learn writing, chemistry and algebra in high school—understanding money basics is a vital skill many kids lack when they get to college. So, one of the most important skills we can help our teens learn is how to manage their money.
Once our teens are out in the “real world,” expenses will add up quickly. There are pricey textbooks to buy, rent to pay, roommates to split bills with, new modes of transportation to figure out, plus food and entertainment expenses. It’s a lot to learn on the fly.
Then, if your 18-year-old gets that first credit card with no understanding of the consequences down the road, they can do some real damage. Student loans are one thing, but adding high interest credit card debt to the mix can result in a mountain of debt.
Kids who understand how to save and the importance of planning for their future have a huge advantage when they enter the adult world. Plus, in the process of learning how to manage money, our kids pick up other valuable skills as well. For example, landing that first part-time job teaches kids the value in a strong work ethic, helps keep them out of trouble, and helps them learns valuable social skills that will carry them throughout their lives.
So start smart! Teach your teen these valuable money tips now to ensure they start off on the right foot toward a strong financial future.
1. Budget & Banking Basics
Just as we adults need to understand the importance of budgeting, kids also need to “get” budget basics. Help your teen write out a basic budget—write down money earned, money spent, and where the remaining money will go. Include savings and charitable giving as well. We offer this printable budget worksheet if you need a simple way to help your teen get started budgeting.
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Most high school students can handle a basic savings account—and by age 16, many are ready to open a checking account as well, especially if they’re earning money from work. Some banks and credit unions offer special “teen accounts” where parents can view and guide their kids through financial decisions. You might also want to ask your bank if they offer a reloadable debit card for teens, like TD Go from TD Bank. This type of card helps your teen learn how to responsibly use credit and debit cards.
2. How Much Things Actually Cost
Many kids simply don’t have a handle on how much things actually cost or the value of any particular item. $200 boots or $80 concert tickets might seem like a drop in the bucket. Trendy “haul” videos on YouTube (where teens show off piles of merchandise they just bought) perpetuate the idea of a disposable culture where you can “shop ‘til you drop” without consequence.
Before you shop for items like school clothes or videogames, let kids know the parameters of your budget for the trip. If a teen knows they have $200 to spend on school clothes in total, they’ll be less likely to drop half of it on one pricey item. Also help your kids understand other household costs, like groceries and toiletries, so when they’re shopping on their own, they’ll know a great value when they see one.
3. What Your Family Finances Look Like
Many of us don’t want to burden our kids with or own financial worries and concerns. We may be hesitant to share our finances with our teens or let them know how much we earn. While using discretion when it comes to sharing information with your kids is advised, letting kids see your home budget and modeling good spending habits can help them get a better understanding of what a household’s finances really look like.
When you budget for your next trip to the grocery store or for an upcoming vacation, share the amounts with your teen and let them know your spending plans and parameters. You might be pleasantly surprised to find they’re more supportive of staying on a budget when they’re part of the planning process.
4. Why Saving Up is More Satisfying than Instant Gratification
One of the most important lessons kids can learn is how to save up for something special. This process helps them understand the value of what they’re getting and will also teach them that they can work to achieve their goals and make their dreams possible. Think of how much more satisfying their Xbox or new bike will be when they’ve worked hard to get it!
If you feel your teen needs some help or if you want to incentivize them, offer to cover half of the item if they save up for the other half. If they don’t have a job, find ways for your teen to earn money or implement a rewards system so they can get the things they want by helping out.
5. No Means No
When we cave to kids’ demands, it sets a precedent—x amount of whining or teasing is what it takes to get something. While we may want to indulge our kids (and childhood is short, so we may have a hard time saying no), sticking to our guns teaches kids an important lesson in boundaries.
Nowhere else in life will begging or demanding pay off. Learning that we have to respect boundaries and work for things we want are important life lessons that all kids need to understand. When your teen gets to college or moves out on their own, they will quickly learn this lesson. Help them get a head start by always standing by your answer.
6. The Value (& Fun!) of a Part-Time or Summer Job
Remember your first job? Maybe it was serving ice cream, bagging groceries or helping out at the local pool. Whatever you did, I’m guessing you have a few fond memories of it—you probably built great friendships and loved the independence that came with earning an income.
While high schooler’s primary job should be learning and going to school, many teens love the opportunity to earn some money on the side. Help your kids find a job that fits their personality and aptitude. If they’re great with kids, maybe a summer nanny gig or babysitting would be great. If they love dogs, why not walk pups in the neighborhood to earn some dough? Retail, fast food, and outdoor jobs can also be great for teens. It gets them out of the house, teaches them responsibility, and helps them prepare for a “real job” later on.
7. Why We Give Back
Teach your kids the importance of charity and giving back to others. Giving money to their church, a cause they support, or another endeavor can help kids learn the satisfaction and joy that comes from giving to others. It helps them feel they’re a part of their community—and they’ll even be able to see how every small donation adds up and can help those in need.
Many teens enjoy participating in run/walks for charity or food/clothing drives as well. Learning how to volunteer your time or collect items for a drive can be a powerful lesson. Teens will understand the value of their time and how they can experience the warm feelings that come from working hard to help people.
8. How To Save for/on College
High school students should understand the correlation between good grades, doing well in school, and scholarships and financial assistance for school. Many high schoolers, especially in their freshman and sophomore years don’t make the connection that their hard work now will pay off when they’re applying to schools and looking for financial assistance.
Teens can get a jumpstart (and save on college) by taking AP classes and testing ahead on certain subjects or doing concurrent enrollment and taking college-level courses in high school. If they’re involved in sports or a school club, encourage them to excel so they can work for a scholarship. If you feel it’s appropriate, help your teen save for college or figure out a financial plan to help them pay-as-they-go and do what they can to avoid student loan debt.
9. Why Healthy Choices Lead to Wealthy Lives
Alcohol, cigarettes and other habits can cost a lot of money, as can splurging on expensive food and entertainment. Exercise and a healthy lifestyle can help stave off a myriad of expensive problems later in life. Teens who understand the consequences of their choices now are more likely to avoid the financial and physical toll later on.
Help kids make healthy lifestyle choices. Encourage them to be active, exercise, eat healthy, and embrace a positive mindset and outlook. Teens should understand that healthy lives are well within their grasp and that working out and living healthy don’t have to be expensive.
10. How To Protect Their Identity
In the days of social media and online activity, identity theft is rampant. Teens who may be used to oversharing and putting information out there should understand that there can be dire consequences—from identity theft to a potential employer or college viewing compromising photos.
Tell your kids the dangers of sharing too much online and of being fast and loose with credit card and financial information. Help them select passwords that are strong and increase their privacy settings where needed. Teens look to us as parents to help navigate the world. It’s our duty to give them the skills they need to be protected.
Help your teen be successful in the long run by helping them learn these smart financial lessons in high school. They’ll be more prepared when they move on to college and the big world and they just might be able to help their peers make better choices as well.
Many banks, credit unions and even high schools offer personal finance classes and activities. Encourage your kids to sign up and check out the resources available in your area. Kids will be proud of their financial savvy and independence and you can rest easy knowing your teen understands these valuable financial lessons!