How to Teach Financial Literacy to Older Kids and Teens
Adolescence is a Great Time to Teach Your Child Responsible Financial Habits
As your child gets older, it’s important to teach them how to be responsible with their money. Before your child reaches adulthood, they need to know that money is a central part of life in today’s society that must be budgeted wisely. Below are some of the best methods for teaching your older child or teen how to be responsible with their finances.
Open a Savings Account
While piggy banks or money jars are a great way to teach young children about saving up cash for small spending goals, teens will be saving up for more expensive purchases and should be learning about compound interest. One of the best ways to help your teen learn how to save money is by opening a savings account for them. This will allow your child to develop healthy saving habits early on.
Additionally, opening a savings account for your teen is a great opportunity for teaching them about long-term savings for major life events, like college, buying a house or retiring. While it may be difficult for your child to wrap their head around these expenditures, making them aware of high-cost life events and the importance of saving up for them will help them when they’re older.
Include Your Child in the Family Budget and Spending Obligations
Making your teen aware of where your family’s money goes can help them understand just how important it is to be responsible with their finances. Including your child in the process of budgeting, showing them how to pay bills and explaining to them what a mortgage or car payment is will help them understand that money is a central part of adult life that must be handled responsibly.
Plus, being aware of the family budget will help your child understand that they must prioritize certain expenditures over others. Since adolescents can be impulsive with their money and subject to peer pressure, knowing how to prioritize their spending will help them be critical of the pressures they experience from peers and teach them to resist financial impulsiveness.
Teach your Child That Money is Earned
Older children and teens need to understand that money is something that is earned rather than gifted. While granting your child an allowance for household chores may have been sufficient when your child was younger, it may be a good idea to encourage your teen to seek out part-time or summer employment. Aside from giving them additional cash, it can help them find career direction and develop a sense of responsibility for their own money.
Remember that it’s never too early to teach your child about the value of financial responsibility. Your child’s adolescence is the perfect time to fine tune their spending and saving habits to set them up for a life of financial responsibility and success.