Personal Finance 101: Teaching Teens about Money

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Personal Finance 101: Teaching Teens about Money

Personal Finance 101: Teaching Teens about Money

As a parent, one of your jobs is to teach your children how to manage money responsibly. And unfortunately, you won’t get much help from schools. According to a recent review of middle school and high school curriculums, personal finance classes are noticeably absent. This leaves you and you alone to bear the burden of raising a financially fit teenager.

Your teenagers are experiencing a completely different economic environment, world and financial situation now than you did at their age. Sit down with your child and find out what they know about money. You may discover that you have taught them well or you may find that they do not have a realistic view of the financial world. Cover topics they can relate to and what’s happening around them, such as bank failures, the college-job tradeoff, ways they can earn their own money and ways they can save money.

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Bank Failures

The past few years have seen record high levels of bank failures, which may leave teenagers feeling as if banks are not a safe place for money. Educate your child about the Federal Deposit Insurance Corp. (FDIC), which insures bank accounts for up to $250,000 per account, per banking institution. Let them know that not one person has lost their money from a bank closure since the FDIC emerged in 1933.

College-Job Tradeoff

Find out from your teenager if they think a college education helps land them a better job, a more solid financial future and is worth the expense. Use facts and figures to show them the right answer is a resounding yes. College graduates earn almost twice the amount of high school graduates, according to the U.S. Census Bureau. They’re also much less likely to be unemployed, more likely to establish retirement savings accounts and put money in the bank.

Ways to Earn Money

Question your teen to see what ideas they can come up with for earning money. Beyond babysitting, numerous ways exist for teens to earn an honest buck. For example, a teen might be equipped to teach seniors about technology such as computer lessons, loading music onto iPods or helping them learn the DVR. Or a teen could start a dog walking service or pet sitting service, or become a car washer. There’s a myriad of other options your teen should be able to come up with that would help them learn the value of a dollar.

Saving Money

Finally, determine what your teen knows about ways to save money. Teach them to evaluate their situation each time they get paid. Have them establish a savings goal – maybe to save for their first car or to help pay for college expenses – and have them put a percentage of their money into a savings account toward reaching their goal. The money leftover can then be their fun money.

When it comes to learning about money, your children look up to you. Teach them to be responsible so they can secure a stable financial future on their own.

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