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How To Teach Teens About Money

Teens Want to Manage Money Better, but Adults Shy Away from Discussing It

According to a recent Wells Fargo study, 83% of teenagers want to be better with their money. This statistic is in stark contrast with the fact that most adults tend to avoid discussing financial matters with their children.

As adults and parents, it’s crucial to set the standard for these important conversations and help teens develop healthy money management habits.

Starting the Money Conversation with Teens

The key is to bring the abstract and concrete together for kids. A great way to do this is by instituting both one-time expenses and recurring expenses with teenagers.

For example, you can help them save for a specific purchase, like a bike or a laptop, while also discussing the reality of regular expenses like rent, utilities, and cell phone plans.

By setting a budget together, you can help teens understand the importance of balancing short-term and long-term financial goals.

This also introduces them to the concept of compounding, where their money can grow over time through interest earned on their earnings.

Three Tips for Teens Preparing for College and Beyond

  1. Savings and Compounding: Explain the power of compounding interest to your teen. Show them how their money can grow exponentially when they start saving and investing early.
  2. Understanding Credit: Before your teen heads off to college, make sure they understand the basics of credit. Explain what credit is, why it’s important, and consider making them an authorized user on your credit card to help them start building a credit history.
  3. Budgeting: Utilize tools like Wells Fargo’s Life Sync app to help your teen create and manage a budget. This will give them the skills to manage their everyday expenses and work towards their long-term financial goals, like saving for spring break.

Empowering Teens to Take Control of Their Finances

By having open and honest conversations about money, adults can help set teens up for financial success.

Teens are already eager to learn and discuss personal finance, so it’s up to us to provide them with the knowledge and tools they need to make informed decisions and build a strong financial foundation.

Ashish
Ashish

Whether it's exploring the impact of emerging technologies on business operations or providing tips for effective project management, this author's writing is always informative and engaging.

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