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Category: Teen Money

Teen Money
by dee@kidsmoneyacademy.com 0 Comments

Why is Age 18 Significant for Your Teen and You Financially?

When you plunked the bowl of cereal down in front of your kid this morning, did you do a double take at how big they’d gotten? All of a sudden nothing’s fitting, they’re getting those moody teenage attitudes, and next time you blink? It’s going to be another year older (if that!) and too much closer to being eighteen and a legal adult!

Where did the time go? How is it they are old enough to do all those adult things, like:

  • Sign contracts
  • Get a credit card
  • Apply for a loan

Before your little (or big!) gets to that point, it’s important to teach them everything they need to succeed in life. School education is sorely lacking when it comes to personal finances, so it’s up to you as a parent to teach your kid about money. The ways to use it, and the ways not to use it.

Money is a tool, but just like a hammer, used incorrectly can cause some painful problems. You aren’t doing your child any favors by forking over the cash or card each time they hold out their hand. That’s just asking for a future problem. So how can you make sure your kid is prepared for those future adult moments? You’ve got to teach them!

It might not be fun, but it’s necessary. Did you know that in many households money is a taboo subject? We can talk to our kids about avoiding drugs, but we can’t teach them about budgeting and the actual value of things they are spending that money on? That’s crazy! It’s time to put a stop to the myth that having serious conversations about money with your kids is a bad thing.

Here’s how:

First, have THE talk

You know, the one about making sure you save, not just spend! Sure, a new pair of sunglasses or a video game would be really great to have, but practicing delayed gratification is a really important skill to have. They’ll thank their adult selves later when they’ve saved up enough for that new gadget without going into debt, or having to skip buying an essential item, like groceries or gas for their car.

 It’s important to help your child get into a habit of saving. Once in the routine of consistently funding a rainy day reserve, they’ll stay in that mode the rest of their lives.

Need a fun and interactive way to help your teen budget better?

Our one-of-a-kind Budget Workbook for Teens is the perfect tool for your teenager! It is a printable, fillable workbook that will get your child to be excited about money and their future.

Includes 3 bonuses, including monthly Zoom calls, your teen added to The Future Millionaire Club, and a private Facebook group for parents!

Buy the Teen Budget Workbook

Show, Don’t Tell

How will your child know how to handle finances if you don’t show them? They aren’t going to realize how expensive the electric bill is if they don’t see it, right? And they didn’t know how to make scrambled eggs til you showed them. Personal finance is no different, it’s a learned skill. Without someone explaining and demonstrating the basics such as how to bank, how to write a check and balance the checkbook, and how to budget, things are going to be much harder for your child out there in the real world.

Make the most of your time now, to show, not tell. Go grocery shopping together and teach them to compare prices and sizes. Model good spending behaviors and savings habits. Be open with talking about saving for larger purchases, like vacations, and how it’s important to make sure necessities are paid for first, before the extras.

Encourage a Budget

No child is ever too young (or too old) to start budgeting. Having an idea of what you need to spend your money on and how much is left is going to be something that they will have to do for the rest of their lives. Why not help them learn how to budget and take the overwhelm out of this new challenge? Budgeting doesn’t have to be boring. It can be as simple as a piece of paper or labeled envelopes, or in an app or spreadsheet. The trick is to find what works best for your child, and it is something that they will actually follow through with.

What’s next?

When the time comes for those big, adult steps like the loan, the credit card or the contract, use these tips to help your child stay safe and aware of what they are doing.

Loans

Before your teen wants to sign for a loan, read it through with them. Make sure they realize that a loan isn’t free money. It’s something they are borrowing, and will have to pay back, often at an interest rate. Penalties for missing loan repayments or defaulting on the loan can have serious financial consequences that can follow them for many years.

Credit Cards

A shiny credit card can be so tempting! Especially when there’s a fun design on it. Buy something now, pay it back later when you have the money…right? That’s a perspective most kids (and let’s be honest, many adults!) have, but since you are here, then you know that’s not a good choice. Just like with a loan, your child may not realize the interest accrued on a credit card can be astronomical, with many cards even charging 25% interest!

Help them to read through the fine print on the application, and make sure they realize that while building credit can be a good thing, having bad credit from missing payments isn’t a good thing.

Contracts

For those going off to college, a contract might be needed for off campus housing. Teach your child how seriously they need to take that piece of paper they signed their name to. Not following the rules of the contract can result in a number of adult problems they might not be ready to face! Especially if Mom or Dad isn’t nearby to help!

Teaching your children how to handle their money responsibly doesn’t have to be scary, and it doesn’t have to be hard. It can be done naturally, and incorporated into everyday situations. Before you know it, your teen will be ready to tackle any of life’s financial challenges. Now, if you could just get them to pick up that dirty laundry covering the floor…!

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Teen Money
by dee@kidsmoneyacademy.com 0 Comments

How to Help Your Teen Resist Financial Peer Pressure

For good or bad, peer pressure is part of teenage life.

Kids influence each other greatly as they navigate adolescence, and it can be incredibly tough to forge your path as a teenager. While young people are affected by all kinds of peer pressure, one area of development can lead to serious consequences as an adult: money-related pressure. If kids begin to try to “keep up with the Joneses” at a young age, it can be really difficult to cut out that behavior as an adult. Fortunately, there are ways that we can help our teenage kids deal with these challenges.

Marketers are ruthlessly effective.

They target vulnerable populations, those who are not fully independent in their thinking and spending habits. Like teenagers! These marketing companies appeal to the idea of being “cool,” and especially being sure to fit in – because everybody else is. Whether it be smartphones, clothing, video games, or even cars for older teens, a lot of pressure is created for kids to fit the mold. Even though their Samsung base model phone may still work perfectly fine, the iPhone X is new – and all of the cool kids have it. Teens are faced with a lot of pressure to buy, buy, buy.

At what point does this stop?

Throughout college, into young adulthood, and beyond, many people will continue to spend beyond their means instead of within them. Many experts cite this as the single biggest obstacle to wealth. People may bring in larger and larger paychecks over time, but these spending habits are so ingrained that they cannot accumulate wealth. The goal becomes to live the high life: buying the latest, most expensive things, booking luxury vacations, outdoing your neighbors. Instead of saving and investing money, many do their best to keep up with the Joneses, costing their financial future as a result.

For teenagers, though, this pitfall can be avoided. Parents can teach their kids important lessons about how to overcome peer pressure that they certainly will face, and instill positive spending habits for now and the future. Above all else, we adults can model good money management and spending within our budgets.

The most important lessons, including those about financial responsibility, begin with clear communication with your teen.

It is key to establish that comfort zone with your kids, where they know they can trust you to not judge, as well as to create a mutually-respectful interaction. Explain to teens that advertisers and marketers can be sneaky, and they are directly trying to get you and your friends to buy their products. It is good to have some skepticism when watching a commercial or seeing an ad online. If kids realize that the latest gadget won’t make them cool, that can go a long way into avoiding overspending on expensive products.

Another way to help your teens rise above peer pressure is to encourage and celebrate leadership within them.

Point out bold, independent people – whether they are friends, celebrities, relatives, entrepreneurs, or someone in the news – who are making positive changes and influencing others in a good way. When kids make their own choices, and not just doing something because that’s what everyone else is doing, call it out. Congratulate them. Let them know that they were born leaders and that success will come by confidently making decisions that they know are right. Hopefully, as teens turn into adults, this idea will stick. Instead of buying the latest, most expensive car just to impress others, they will choose one that fits into their budget. Real wealth can be built, not by constantly keeping up with others, but by choosing to not care what others think about your spending, and living within your means!

Set your teen up for financial success and confidence!

Our one-of-a-kind Budget Workbook for Teens is the perfect interactive and exciting financial learning tool for your child.

Includes 3 bonuses, including monthly Zoom calls, your teen added to The Future Millionaire Club, and a private Facebook group for parents!

Buy the Teen Budget Workbook

One of the most dangerous, most powerful forms of peer pressure that our teenagers face today is through social media.

90% of teens are on one or more social media platforms, and they are on them a lot! Peer pressure becomes much more complex. Instead of a group of kids influencing others to “get on board” and keep up, even if it is financially irresponsible, now you have a whole continuous stream. Photos and Instagram posts show off people’s material milestones. All that matters to teens is how many “likes” people got, and how many friends or followers they may have on social media. Someone with a ton of influence posts something that may not be financially responsible, like their $1000 shoes, a picture of their exclusive tropical vacation, or their penthouse party in Las Vegas. And guess who that affects the most? Young adults and teens.
So, what can parents do about it? Monitor teens’ social media, closely. It is okay to demand access to kids’ online activity, especially if that is established when kids first venture into the world of social media. If kids are let loose into the online world, without adult supervision, they can be drawn down a negative path pretty easily. And this is not just about money. This peer pressure can have a serious impact on body image, self-esteem, and the ability to think independently. As kids get older, parents can loosen their control and monitoring (not completely, though!) to show their children that they trust in them to do the right thing. More than likely, teens who trust – and are trusted by –their parents, will make responsible decisions in money and life.
As with anything in parenting, helping teens overcome peer pressure is a fine line. You try not to be a “helicopter parent,” but you can’t be hands-off, either. Keeping lessons and discussions focused on financial responsibility can be a great approach. If teens can learn at a young age that “keeping up with the Joneses” is a dangerous habit to get into, those lessons will shape the adult they become. Peer pressure is all around us, at any age. Teens, though, have so much more pressure on different levels. The guidance that we parents can give them during these years is crucial, more so than ever.

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Teen Money
by dee@kidsmoneyacademy.com 0 Comments

Money Knowledge Your Teen Will Thank You For Eventually

It is a well-known fact that teenagers know everything.

At least they think they do. Sure, their knowledge of specific topics is pretty impressive, like video games and Dua Lipa (I literally just heard of her yesterday; apparently, she’s a pop star). But teens have a lot to learn from their parents: especially about money. With an organized plan to make sure we impart our money wisdom onto our kids, they should be well on their way to being money-savvy adults. Let’s break out that crystal ball because here are the 6 “thank-yous” you will hear from your teens in the future.

1: Thank you for teaching me how to budget

First of all, you’re welcome. And I’m glad I taught you some manners. A budget is critical for anyone, whether they are kids or teens or adults. Learning to budget in these formative years is going to set the spending stage for the years ahead. Some key points to teach teens are:

  • Create a balance in your budget – be specific and clear with your spending and saving categories
  • Live within your budget – if you overspend as a teenager, you are flying into the danger zone as an adult
  • Teach a system and stick to it – for example, the 50/30/20 budget (50% needs, 30% wants, 20% savings/debt) is a popular one
  • Put your teen’s technology addiction to good use – use apps like YNAB to budget

Need a fun and interactive way to help your teen budget better?

Our one-of-a-kind Budget Workbook for Teens is the perfect tool for your teenager! It is a printable, fillable workbook that will get your child to be excited about money and their future.

Includes 3 bonuses, including monthly Zoom calls, your teen added to The Future Millionaire Club, and a private Facebook group for parents!

Buy the Teen Budget Workbook

2: Thank you for showing me how to buy my first stock

Historically, the stock market is the most powerful, reliable investment space available. To create real wealth, you need your money to grow exponentially over time. Hello, compound interest! Getting teens interested in stocks, and showing them how to buy their first one will give them a huge leg up.

  1. Explain the basics of stocks. It can be very complicated when you are just starting; simple ideas like, “buy low, sell high” can help them understand.
  2. Use concrete examples. Microsoft, to a teen, is most likely boooring. But it is a $1 trillion company, and its stock is expected to rise steadily over time. Others, like Tesla, are pretty cool. Its CEO moonlights as a rocket-launching space explorer and an inventor of the Hyperloop – whatever that actually is. Tesla’s stock is very volatile, though, and is not for everyone. Show the differences among stocks as far as risk tolerance.
  3. Walk your teen through the process of actually buying stock. You will need to have a funding source, such as a checking account, along with a brokerage account, like E-Trade or Robin Hood. Once the money is sent from the checking to the brokerage account, submit an order to buy, and voila! You are a stockholder.
  4. Make sure that teens know stocks are for the long haul. As Warren Buffet says, the best time to sell a stock is “never.” Buy a quality first stock and hold on.

3: Thank you for gifting me personal finance books

I know. Your teen thought these were the books you read to put them to sleep when they were little. In reality, these are the ones that will help you sleep well as an adult. You have likely read/skimmed those personal finance books in your bookcase. Hand them down!

  1. Try to gift an assortment of materials. Many personal finance books repeat similar ideas. Diversify into specific topics, so teens have a toolkit to work with.
  2. Have teens explain, in their own words, the concepts they learn.
  3. Apply these principles early, beginning with allowances and their first jobs.
  4. Encourage kids to begin a personal finance library to build as they get older.

4: Thank you for teaching me how to save

Teens sure know how to spend; they can be taught to save, too! Having a money management system can help a lot, such as using Spend-Save-Give jars. Saving becomes part of kids’ routines, moving through the teenage years into adulthood.

  1. Start saving from a very young age. The earlier, the better!
  2. Offer to match savings with your child. This can be encouraging – their money grows twice as fast! Also, it shows the power of teamwork and builds a strong bond with kids.
  3. Show them how to set savings goals. Saving for a large purchase that they really want, like a car, can be motivating. Figuring out how much to set aside each month can help them monitor their own savings.

5: Thank you for shaping my abundant money mindset

So gracious today! But the truth is your teen’s view on money is all in their heads. They are likely either going to think that money is great or that money is evil. An abundant money mindset is enjoying money, knowing that you have enough, the enjoyment of giving money. In short, it is the belief that money is positive, and there will always be plenty around.

  1. Explain to your teens the ideas of scarcity vs. abundance. There is always an opportunity, you just need to know where to look.
  2. Giving and saving can feel just as good (or better!) than spending money.
  3. Money is not evil. It can lead to great things.
  4. Abundant money mindset is a belief in yourself. The rest will fall into place.

6: Thank you for opening a 529 college savings account

Many parents don’t opt to open a 529 account, but it is a really great tool. College is (unbelievably) expensive, so any way that makes it easier – and cheaper – to save for it is a plus in my book.

  1. Regular contributions, starting when your kids are small, will cover most or all of the college tuition. Your balance grows over time, too, as it is invested in the market.
  2. 529 withdrawals are not taxed. Not. Taxed. (If the withdrawal is for anything school-related.)
  3. Anyone can contribute to your child’s 529. You hear that, Uncle Bill?

So, there you have it, my soon-to-be-adult: the money knowledge you will thank me for giving you as a teen. Stick to these 6 ideas, and you should be financially ready for your future! Now, go listen to your Dua Lipa – whoever that is.

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