Before you discuss teenage financial literacy with your children, it’s critical that you understand the concept yourself. To define financial literacy in the simplest terms, it refers to knowledge and skills that help you make investment decisions. So, Financial Literacy for Teenagers is an important aspect as it makes teenage financially strong and it affects the country’s economy too. if you’re not a financially literate person, or you’d not be able to make decisions then we will assist you through our services.
Financially literate Should Know These Topics:
Whether you’re purchasing your dream property or a t-shirt, budget plays an instrumental role in guiding your decisions. You may not understand this when you’re young, but as soon as you cross the age 13 threshold, bam! You’d need to set aside an amount before you can buy anything.
This won’t be a problem for those well-versed in financial literacy. They’d be able to allocate their budget conveniently.
Emergencies don’t come unannounced, but they turn your life upside down upon arrival. This is especially true if the calamity has befallen your loved one. With no other choice, you’ll have to ask for a loan, which comes with a set of problems.
But do you know how financially literate people solve this? By building an emergency fund. This way, they have enough money to get through difficult times.
America, the land of the free, is drowning in debt. Just at the start of this month, it was reported that the US national debt topped $31 trillion for the first time. And when you think how many debts an American has to deal with, it’s understandable.
From student loans to auto loans, a new kind of debt will be waiting for you at every step of your adult life. That’s why financially literate individuals prepare for them beforehand, so they don’t face any problems in the future.
Parents’ Concern About Financial Literacy
If you had all the money in the world, you’d want your children to inherit every penny. But not all parents are fond of this idea.
Take Joan Crawford, one of Hollywood’s most prominent movie stars, as an example.
When she died in 1977, her net worth was around $8.5 million ($41,631,485.15 in 2022). Despite this, she left a small amount to her twin daughters, Cathy and Cindy, and donated the rest to various charities.
You might call Joan a fool for doing so, but those who understand the importance of financial literacy wouldn’t. Unfortunately, therein lies the rub. People prepare their children to face everything in life yet leave one of the most, if not the most, crucial parts out – money management.
Consequently, they have to face challenges in adulthood, as evident from the survey conducted by Lending Club.
According to its research, 54% of adults in America are living paycheck to paycheck. This means in an unfortunate event where they require a hefty amount of money at once, they’d have nothing to bounce back with. Therefore, you must impart this wisdom to your children. And we’re going to help you in this regard.
Financial Literacy for Adults
Financial literacy for adults is the same as we’ve explained at the blog’s beginning. But if you need a reminder, here’s a summary:
- Financial literacy means acquiring skills that can help you live a financially stable life.
- It has plenty of applications in real life, including but not limited to budgeting, debts, loans, and emergencies.
- It serves as a roadmap to help you achieve your financial goals.
Financial Literacy for Children
Your kids don’t have to reach a specific age before you can teach them about financial literacy – that’s pretty much the essence of this blog. But since children understand things differently than adults, you have to get down to their level. And that shouldn’t be too hard. You can combine financial literacy with mathematics homework.
For instance, you can play a game with your children where you give them a few coins. Afterward, you can count the total number. This is one of the most basic ways to teach children financial literacy.
Importance of Financial Literacy for Teenagers
Financial Literacy vs. Financial Wellness
Do not confuse financial literacy for young adults with financial wellness. The former refers to possessing sound money-related skills, while the latter is more of a state in which you feel comfortable about your current and future financial condition.
Financial Literacy Tips
Now that you’ve understood the basics of financial literacy for teenagers, the next step is talking to your children about it. Here’s how to do it:
1. Be Open with Your Children
As a parent, you want nothing but the best for your children. And sometimes, that includes shielding them from the harsh realities of life, like money woes. You may think you’re doing them a favor by avoiding talking about it, but that’s not the case.
Your kids will earn their own money at some point in their lives. Wouldn’t it be helpful if they knew how to spend and save it? That won’t happen unless you break the taboo and have an honest conversation with your offspring.
2. Give Your Children an Allowance
Until your children can earn money, you are responsible for fulfilling their needs and, if possible, wants. That begins with setting a weekly or monthly allowance. Although some people are against this, we’re not one of them.
When you give your kids pocket money, it provides insight into their spending habits. For example, do they spend all their allowance or keep some of it? This can prove immensely helpful in conversing with your children.
3. Teach Your Children How to Save
After setting an allowance for your children, instruct them to save some of it. And since they’ll have a hard time understanding why talk to your kids in a language they would easily understand?
For instance, let’s say you have a 13-year-old daughter who wants to go on a school trip with her friends. Naturally, she’ll request you to sponsor it. But instead of giving in to her demands, tell her that she’d have to save money from her allowance. This way, she’ll be cautious of how much she spends.
4. Help Your Children Earn Money
It’s said that one doesn’t understand the value of money until they have to earn it themselves. That’s very much true for teenagers, who think their parents have a golden egg-laying goose. Therefore, look for opportunities that can help your children generate income.
Of course, this doesn’t mean turning them into labors but instead finding something that’s teenager-appropriate, like babysitting. In the US, anyone above 11 can become a babysitter.
5. Let Your Children Make Mistakes
Adolescence is considered the most delicate phase of a person’s life. That’s why most teenagers become highly sensitive and act weirdly, especially toward those closest to them. When teaching your children the basics of money, keep their rebellious nature in mind.
If they’re making a mistake that could cost money, you might be tempted to step in, but let them do it. Afterward, you can leverage the situation to teach them something important; they will remember the lesson for a long time.
6. Get Your Children Involved in Charities
Children fortunate enough to grow up with luxuries rarely understand what it’s like living without them. Being a parent, the onus is on you to ensure your kids don’t end up feeling entitled.
An effective way of preventing this from happening is to involve them in charities. Once they see what life is like for those who can barely make ends meet, their children will start feeling grateful for the things they have. That, in turn, will teach them the value of money.
And with that, another chapter of our blog comes to an end. So far, you’ve learned what finance for teens is and how you can teach it to your children. Now, let’s discuss the why – why financial literacy is beneficial for teenagers.
Advantages of Financial Literacy for Teenagers
- It Distinguishes Wants from Needs – With each passing day, it is becoming increasingly difficult to buy what you want vs. what you need. And you can thank brands for that, who present their products in such a shiny way that it’s practically impossible not to click on ‘Order Now.’ Fortunately, financial literacy teenagers know better than not to fall for this trap.
- It Emphasizes the Importance of Investing – Financial literacy and investment decisions go hand in hand. It shows teenagers various methods to earn passive income – a skill that comes in handy during their adult lives.
- It Helps Prevent Scams – Financial scams are on the rise and only expected to grow tenfold in the future. Owing to the progress in technology, scammers have developed different strategies to dupe people, especially teenagers. Fortunately, it’s nothing a financially literate individual can’t handle. They won’t make decisions without prior research.
The next time you’re having a family dinner with your teenage children, pay attention to the topics being discussed. If financial independence is not one of them, you need to do things differently. Or, you can visit American Made LLC.
“And why should I do that?”
Because on our website, you’ll find plenty of helpful resources that teach you the basics of financial literacy, including:
- Financial literacy presentations for teenagers
- Financial literacy vs. financial wellness
- Financial literacy books
- Financial literacy videos
- Financial literacy podcasts
- Financial literacy curriculum
- Teenage financial literacy statistics
Whether you want to use the above-mentioned resources to teach yourself or your children, the outcome will be beneficial for one and all. In addition, we sell high-quality and fashionable merch that’ll make it difficult for people not to stare at you.
Frequently Asked Questions (FAQs)
Financial literacy is important for teens for many reasons. But the crux of the advantages is the same – empowering teenagers to make better financial decisions.
Yes, financial literacy programs are highly effective. Those who receive coaching or ask for advice develop better spending and saving habits.
Kids can improve their financial literacy in many ways, like asking parents finance-related questions, participating in financial activities, or enrolling in financial literacy programs.