In a survey on Teens & Personal Finance conducted in February 2022, it was found that more than half of the teenagers (54 percent) feel unprepared for future financial challenges. The survey also pointed out that about 69 percent of teens are influenced by the rising cost of higher education when deciding whether to attend college.
Additionally, the study revealed that 41 percent of teens aren’t getting any financial education at school, prompting a need to consider what financial knowledge can help young adults in the future. Introducing teens to multiple finance-related topics might seem overwhelming, but focusing on a few key lessons can significantly boost their financial understanding. Here are ten essential topics to discuss:
**Budgeting:** Even if your child doesn’t have many expenses yet, learning to budget can help them manage their money wisely. Teach them to track their income and expenses and the importance of staying within their financial limits.
**Saving:** Encourage the habit of saving money. Introduce the idea of paying oneself first, where a portion of income goes into savings before spending. Setting up a savings account can motivate them as they watch their savings grow.
**Emergency Fund:** Explain the importance of having an emergency fund. This fund can be a lifesaver during unexpected situations like medical emergencies or job loss.
**Investing:** Start with the basics of investing, such as stocks, bonds, and mutual funds. Help them understand the benefits of compound interest and the potential for long-term growth.
**Debt Management:** Teach your teen about the risks and responsibilities of borrowing money. Discuss credit cards, interest rates, and the importance of paying bills on time.
**Credit Score:** Many people don’t realize that building a good credit score starts early. Explain to your teen why a good credit score is important in practical life.
**Needs vs. Wants:** It’s crucial for teens to distinguish between needs and wants. Encourage them to prioritize necessary expenses to avoid unnecessary spending.
**Financial Goal Setting:** Help your teen set financial goals, whether it’s saving for a car, college, or a vacation. Goals can motivate them to achieve and manage their finances better.
**Work and Earning:** Teach teens about the value of work and the relationship between effort and income. Understanding this can be a significant part of their financial education.
**Understanding Taxes:** Explain the basics of taxes and how they directly impact their earnings. This foundational knowledge is a part of managing personal finances.