Financial literacy is a crucial skill that every person should have, and it’s never too early to start teaching your kids about money. April is National Financial Literacy Month, so it’s a great time to start having conversations with your teens about money. However, according to a recent Fidelity study, teen girls are less likely to talk with their families about money than teen boys. Girls report needing to be “more confident” on financial topics. In this article, we will explore ways to talk to your teens about money and help them become more financially literate.
Talking to teens about money can be a challenging task, but it’s essential to get them involved in responsible saving and spending. The Consumer Financial Protection Bureau (CFPB) has created some conversation starters to help you break the ice. Some of these conversation starters include:
- What are your short-term and long-term financial goals?
- What are some ways you can earn money?
- How can you budget and save money?
- What are some ways to pay for college or other future expenses?
Explaining Credit Cards
Credit cards can be a useful tool when used responsibly. However, it’s crucial to teach teens about the costs of a credit card to avoid financial pitfalls. The CFPB suggests teaching teens about the potential drawbacks and benefits of credit cards, such as annual fees, interest charges, and penalties, versus convenience, ability to track spending, and building credit.
Suggesting Money Rules
Learning to have control of credit cards and spending is vital. Help your teen establish money rules, such as paying cash for anything under $20 and never paying bills using a credit card. These rules can help your teen become more responsible with their spending and avoid debt.
Opening Checking and Savings Accounts
After talking to your teen about financial accounts, help them open their own bank account to learn money management skills in real life. Look for accounts that have no minimum opening deposit, no fees or balance requirements, mobile app, and are FDIC Insured.
Building the Savings Habit
Once your teen has a job and a checking account, encourage them to set aside at least 10% of all earnings to build their own rainy day fund. This habit can help them become more responsible with their money and prepare for unexpected expenses.
Reviewing College Expenses
Teens need to know how expensive college can be and understand the portion of their education they will be expected to cover. Start talking about college expenses early in high school years to avoid confusion later.
Teaching your teen about money is crucial for their financial well-being. By having conversations about money, explaining credit cards, suggesting money rules, opening checking and savings accounts, building the savings habit, and reviewing college expenses, you can help your teen become more financially literate. Remember, it’s never too early to start teaching your teen about money, and April is a great time to start!
Learn more about teens and money with BALANCE, one of the many financial education resources we offer to our Members. At Excite Credit Union your teen may be eligible for a Youth Checking Account or Youth Savings Account. Check out all of our checking and savings opportunities here or come into a branch today.