Teaching Teens About Money

Teaching Teens About Money: Lessons for Financial Independence 

How to teach your teen about money. Specifically, how to guide them towards financial independence. If you're like me, a single mom with a 15-year-old son, you know how crucial it is to equip our kids with the knowledge and tools they'll need to manage their finances wisely. My son does know about my debt. So, let's get started!  

Start with the Basics: Budgeting 

First things first—budgeting. It's the foundation of financial independence. I started by sitting down with my son and explaining what a budget is and why it's essential. At 15, your teen is likely already handling some money, whether it's from allowances, part-time jobs, or gifts. It's the perfect time to introduce them to budgeting." 

We created a simple budget together, starting with his income. We talked about the difference between needs and wants and how to prioritize spending. For example, setting aside money for school supplies (needs) before spending on video games (wants). 

Start Simple! Use a percentage system like 50% needs, 30% wants, and 20% savings 

Teach the Value of Saving 

Next up saving. It's a habit that will set them up for success in life. I explained to my son that saving isn’t just about putting money aside; it's about creating a safety net and building towards future goals. 

We started by setting small, achievable goals. For instance, saving for a new pair of sneakers or a gadget he wants. I introduced him to the concept of an emergency fund. I explained that even at his age, it's important to have some money saved for unexpected expenses. Encourage teens to save at least 10-20% of any money they receive. 

Introduce the Concept of Investing 

Now, let's talk about something that might seem a bit advanced, investing. But trust me, it's never too early to start. During lock down my son’s school did a lot of afterschool activities through zoom, google meet, skype, whatever. One was a 1 hour a week for 4 weeks on investing. One of the dads in town was now working from home and taught the class. My son now owns google stock he bought on his banking app. 

They also covered the basics of investing, like stocks, bonds, and even compound interest. 

The brokerage house I use has a mock portfolio. We discussed using it but haven’t. I think it’s a great way to introduce kids to investing. 

Teach the Importance of Delayed Gratification 

Another key lesson is delayed gratification. Teens are often tempted to spend money as soon as they get it but teaching them to wait can be a game-changer. I’m still learning it, so if someone has any tips, please leave them in the comments. Just kidding, actually not really. 

I encourage my son and myself to wait at least 24 hours before making any non-essential purchase. This gives us time to think about whether we really need or just want it. I hope over time, he learns to appreciate the benefits of waiting, especially when it means he can save up for something even better. 

Encourage Earning and Responsibility 

Last but not least, encourage your teen to earn their own money. Whether it's through a part-time job, babysitting, or even doing extra chores around the house, earning their own money can be incredibly empowering. 

People have different philosophies about chores and allowance. Do what aligns with your family. 

Teaching your teen about money might seem daunting, but it doesn't have to be. Start small, be consistent, and most importantly, make it relatable. By giving them the tools and knowledge they need now, you're setting them up for a future of financial independence.