Son will be a Senior in high school after the summer. Last week he got his second part-time job (his first job was as a lifeguard but he wanted to make more money so decided to apply to other jobs where he could work throughout the year). He would have gotten a job sooner but he was busy working on his Eagle Scout project so that was taking his attention outside of school. With him almost done with high school and starting this new job, I feel it’s time to start teaching him about personal finance.
When I graduated from college, I had racked up credit card debt. I thought I was grown. When the different financial institutions came on campus, giving us college kids the ability to sign up for credit cards, I was excited and ready. It was until my credit score was about 525, and I couldn’t buy a house that I realized that was a colossal mistake (a story on its own). I do not want my kids to make the same mistakes because I remember the amount of stress I was in in my twenties due to collection agencies continually calling me and not be able to get anything with my credit score.
When the kids were in middle school, they had a Personal Finance module in Civics class. They also went to a “Financial University” that let them learn about budgets, credit cards, loans, etc. However, I feel that it is a bit young to really grasp the importance of personal finance. This should be taught in high school when they are Sophomores and Juniors.
Since that class, I tried to keep teaching them about spending and saving money. However, after seeing my son’s frivolous spending habits, I decided that it was time to start teaching him before he ends up in my situation.
I have read tons of personal finance books and blog posts. Additionally, I have participated in webinars and listened to podcasts because I never want to feel that level of anxiety again.
I also told my daughter that it would be a good time for her to participate as well-being that she wants to get a job when she turns 16 in a month, so I now have both my teens working on their personal finance education.
Have Teens Be Part of the Household Budget Conversation
Being that they will be contributing to the household budget, I told them during our weekly family meeting that from now on, they will be present when I:
- Create the budget
- Review the budget daily
- Discuss the actual budget and options on what to do if there is additional money in a budget category or we are overbudget
I am not sure how your kids and teens are, but mine think that I am a magician who makes money appear out of nowhere. If you ever read or saw “Cloudy with a Chance of Meatballs,” you get the idea. In this way, they can see that there is a lot more to money than having it and spending it.
Have Teens Create Their Own Budget
My son and I sat down and already created his budget. We discussed that he needs to start contributing to the family household budget by paying for:
- Gas
- Car Insurance (mine went from $66 to $286 when I added him to my plan. I had heard as a teenager that teenagers increase your insurance premium exponentially especially if it’s a teenage boy, but DAMN!)
- Taekwondo
- His Clothing
- HIs Entertainment
We also came to the understanding that if he continued living at the house after he graduates, he would have to contribute to things like the Internet, Mobile Phone, etc.
When we created his budget, his eyes kept getting wider and wider. I could tell that he was already starting to realize that “Oh, I don’t get to keep all that money and just spend it the way I want without going broke?”
When my daughter gets her first job, I will also have her create her own budget. The most important thing to remember does not create the budget and never go back to it again. Make sure to continue having them get into the habit of checking it at least weekly so they start understanding cash inflow and outflow.
Start Discussing Short-Term and Long-Term Financial Goals
Since the kids were in elementary school, we have always discussed goals. I tried to make sure that they at least had one goal that they were working towards. Now that they are older, I want to make sure that they understand that they should also have money goals. They can’t spend all of their money, but they shouldn’t save it all either. We need to create short-term and long-term goals for their money.
At their age, its’ more like saving up for something. My son is a huge gamer so we discussed if there is new technology that he wants to buy in the future or a game that is coming out. We created his first savings goal for the new Gears of War 5 game coming out in September.
I also plan to include them in savings goals that I have for the family and house. For instance, he wanted to go on a family trip when he graduates from high school. I have already started saving, but now he will be part of that discussion including the research to get the estimates for the different categories that create the overall budget for it.
Please share ways that you are helping your teen understand personal finance. Also, please download the household budget worksheet that you can start using or modify that fits your needs.
