9 Must Know Financial Tips for Teens

Teaching your teens about finance is one of the greatest gifts you can give them. Teens love money – and if you can give them some good lessons along the way, you’ll be setting them up for lifelong success. Here are some of our favorite financial tips for teens.

1 – Think long term

Teens are interested in instant gratifcation. They often get jobs so they can afford a car payment, or to buy clothes to wear out with their friends on the weekend. They’re not often concerned with their long-term plan. But this is where you come in, to help give that glimmer of what’s to come – and what can become.

Teens who start putting a little money away now, will have more money saved by the time they go to college, and then by the time they’re ready to rent or buy their first home, or purchase their first car. And those who start investing for retirement at a young age have a much greater chance of meeting their retirement goals, and at a younger age.

2 – Set up checking and savings accounts while you’re still living at home

Part of financial wellness is learning to manage money. So while your teen is at home, help him or her set up a checking account and savings account at your bank. Take an active role in teaching your kids how to balance a checkbook, and how to read their bank statements each month. And as the savings account builds interest, take that opportunity to sit your teen down and show them how that interest compounds over time. It’s exciting!

3 – Find simple ways to start building credit

Ah, credit. It’s definitely not fun to think about, no matter how old you are. And there are real formulas that credit bureaus use to calculate your score – and they all differ slightly.

To start building credit, help your teens familiarize themselves with FICO, TransUnion, and Experian credit score models. Find ways to help them build credit early, like co-signing on a credit card or a car loan, if you’re able to.

4 – Create a budget

One of my favorite sayings I use with my kids all the time is: Failing to plan is planning to fail. A budget is a plan for your money. It dictates how much you have, and how you want to spend it. A budget can literally set you up for life – helping you fgure out how much you want to spend, save, and give throughout your life. We’ve written a bit about budgeting, so be sure to dig into specifcs to help your teen create a budget from his or her part time job, allowance, or budding business.

5. Save First Spend Later

This is the one my parents ingrained in me from a young age. But teens would much rather spend than save. It’s a really hard thing to comprehend, because teens always feel like they have so much more time to make more money. It’s only when they want something they can’t afford, that the “I should’ve saved more” realization hits.

So, to avoid this hindsight note, put some situations in front of them to help this concept not feel so abstract. For example, pose the following questions to your teens and see how they answer. Use their answers to fuel thoughtful dialogue on saving, and to help them realize that saving can equal fun!

Questions to Guide Discussion with Your Teen:

• What are some things that would make you feel sad or regretful if you hadn’t saved enough for, when the opportunity arises? Some examples might be (knowing what your own kids will respond to, of course):
• What if, one day, you found that dream car you wanted, and you knew that you could afford the monthly payments – but you didn’t have enough money for the down payment? How would that make you feel?
• What if your friends decided to take a graduation trip – or spring break trip – somewhere fabulous, and the cost was going to be $2,000 per person, and you didn’t have that?

6. Learn From Your Mistakes

Listen, life isn’t perfect, and we aren’t perfect. But what matters so much is learning from our mistakes. Teach your kids that it’s okay to make mistakes, and they’re going to make mistakes from time to time. It’s how they get up, learn from their mistakes, and move forward, that is going to count in life.

Successful people are able to own their mistakes and glean a lesson from each one. And they make sure not to repeat the same mistake twice! If you as a parent have specific mistakes you’ve made that would be good learning experiences for your kids, by all means – write them down, or use them as talking points in discussions with your kids. The more your kids know, even from your perspective, the better off – and more equipped with knowledge – they’ll be.

7. Start a Business

This is one of my favorite things to talk to my kids about. Kids are never too young to start a side hustle. In fact, a side hustle is a perfect business to start when teens are in high school! While their friends are busy playing video games, kids who start businesses are building life skills – and building their bank account from an early age. With careful guidance from you or a knowledgeable adult – and a whole lot of reading on the subject – starting a business is a great idea for teens to earn money and learn financial skills.

8. Devote Time to Reading About Money

As mentioned, reading is a great way to learn. Whether your child is interested in investing, starting a business, or accounting, there are tons of books available to pique the interest in their young minds.

9. Start Saving For Retirement Now

Show your kids the math. According to CNBC, a 25 year old can make $1 million by age 65, by investing $250 a month, assuming 9% annual interest. By comparison, a 30 year old would have to put away $370 a month at the same return rate to earn $1 million by age 65.

What are You Waiting For?

There’s no time like the present to teach your teens valuable financial skills. Forward these financial tips to your teen today, and make it the topic at dinner tonight!