Talking to your Teenager about Money
Not only is April National Youth Savings Month, but this month we also celebrate Money Smart Week. Both are very near and dear to our hearts here at Rock Valley Credit Union – financial education is central to our mission. This month, we are focused on helping put our youngest members on the right path to financial success. In this blog, we provide helpful advice to help your teenager transition into adulthood with a better understanding of personal finances.
The Million Dollar Question
How do you talk to your teen about money in a way that helps them establish sound financial habits that will last a lifetime? Million-dollar question, right? It doesn’t have to be complicated. Whether they earn an allowance or a paycheck, you can help your teen develop smart money habits early in life. Here are a few areas to help get you started:
- Teach the difference between wants and needs. Most teens consider wants as “needs,” especially when they are relying on someone else (you) to foot the bill. Helping your teen determine a “want versus need” when buying something with their own money establishes a baseline for understanding the value of money. Needs are something you must have in order to live – such as food, housing, clothing – and wants are things that add comfort to your life. Kick off the conversation with your teen by having them make a list of their wants and needs.
- Teach the importance of saving. Saving money to purchase an item on their “want” list is one thing, but the importance of having a rainy-day fund will help your teen survive those unexpected events. Savings is two-fold: save for the needs and wants in life. Work with your teen to determine a set amount to save each month from their allowance or paycheck. Consider opening a savings account dedicated to their needs and a separate one to their wants. Let your teen see their savings grow!
- Teach how to give. When you teach your teen about giving, you’re showing that they are a vital part of something much bigger than themselves. Your teen will have a better understanding of social responsibility – something that can carry over into adulthood.
- Teach how to budget. Work with your teen to establish a budget for a few months or until they get a good hang of it – and then check in often. Help them add up their monthly allowance or paychecks to determine their income and then have your teen identify all their expenses, including a set amount for savings. The money left over should be set aside to give, save or spend.
- Lead by example. One of the best ways to teach your teen good money habits is to lead by example. Your teen might not always listen to you, but they will see everything you do.
As you talk with your teen, help them understand that most of their financial success is completely in their control. By establishing smart money habits today, your teen will be put on a path to financial stability. If you have questions or need additional resources related to other topics, such as college savings and investing, check out these helpful tips from our good partners at Banzai. As always, you can also reach out to our Member Contact Center using our chat feature during regular business hours or call (815) 282-0300.