No matter how old your children are, there’s always an age-appropriate way to have a conversation about money. It’s especially important to speak to teens about money and financial planning, as they are in an important developmental phase wherein their lifelong attitudes and habits are now being formed. Talking money with your teens and young adult-aged children is a great way to ensure they’re ready to manage their money when they leave for college and/or enter the workforce.
Not sure where to start the money conversation with your teens? Here are a few key concepts to cover when talking about money with teenagers and young adults.
Many teens in America get their first job before they even leave home. Working as a teenager can be a great way to build workplace skills and start saving money – but to get the most benefit from employment, it’s important for teens to consider how they’re going to manage the money they earn.
Talk with your teen about their earnings in terms of gross pay and net pay – gross pay being their hourly rate multiplied by how many hours they’ve worked, and net pay being how much they actually take home after deductions, such as taxes. Learning the ins and outs of taxes is a lifelong process, so be open about sharing your experience and knowledge on the subject with your teens.
When chatting about earnings, you can also bring up good saving habits like how to create a budget. Help your teen to list out their expenses, like food money and gas money, and to make a list of their short- and long-term goals for saving money. HUECU’s online banking offers free budgeting and savings tools that can help with this process.
Spending and Saving
When teenagers start to earn money, it can be tempting to spend, spend, spend. Speak honestly with your teen about the issue of impulsive spending, which can ruin budgets. Help them learn how to live within their means and plan ahead to avoid temptation.
To support your children when they first start managing their own money, look into checking and savings accounts created for teens, such as the HUECU Varsity Life Account. Specifically designed for the teenage kids (aged 13-17) of HUECU members, the HUECU Varsity Life Account offers a free checking account with debit card, a free interest-earning savings account, and a Club Account option for additional savings goals.
Post High School
There are a number of financial considerations to be made as your teen moves into their post-high school years.
Electing to study at a two-year institution can save costs in the short run, but attending a four-year school may result in higher earning potential later on. Trade school is a great option for teens who prefer a skills-driven education that gets them into the workforce sooner.
Whatever their plans after high school, it’s important that young adults understand the costs involved and where the money is coming from. If your child is attending college, have an open conversation about the college costs and student loan repayment.
Ideally, your teen will be starting their post-high school life with some valuable money management skills already under their belt. Encourage them to stay up-to-date with budgeting and tracking monthly expenses. Money management can sometimes fall behind when social and academic obligations pile up, so remind your teen about the importance of regularly looking after their financial health.
Conversations about credit are great at any age, especially before your child seeks to get a credit card. Credit topics include what it is, why it matters, and how they can learn their credit score and go about improving it.
For more support on financial education for yourself or your children, check out GreenPath Financial Wellness Program, which offers free access to programs for HUECU members.