As a child transitions into their teen years, it is imperative they develop an early understanding of their personal finances. This discussion and lesson too frequently emerges as they graduate high school and enter the workforce or attend a college, where their understanding or lack thereof is put to the ultimate test in the real world.
Teaching a teen about finances is certainly not a simple undertaking. Largely, they may find the concept unengaging. This is natural, as they may be a young adult, but developmentally are still very much a child.
But just because a teen may find finances a droll concept does not mean they should just be thrown to the wolves immediately after high school. It is the duty of parents and educators alike to get them engaged and connect those teachings to real world principles of financial literacy.
Basic Financial Concepts For A Teen
The world of personal finance is broad to say the least, so start with some basic concepts that you as a parent or educator can teach to a teen.
Start with budgeting and the importance of discerning between income from a career, cost of living expenses, and having savings in a bank account. There are discernable differences many teens may not comprehend. Create a chart and prompt them to brainstorm simple real world examples that you have them identify as either an income, an expense, or savings. As they get the hang of it, explore each one more deeply.
While on the subject of income and savings, design an exercise around the concept of a credit card and their credit score. This can be an active learning exercise teaching them both what credit is, how interest can build up and damage your credit score, and additionally give you an opportunity to have them itemize what expenses are necessities and what are luxuries.
Gamification Can Help
Any exercise you as a parent or an educator can think of will help, but giving them a lecture is a dated and often ineffective concept. Let’s take it a step further.
Teens are increasingly hands-on and intelligent, so learning anything passively will turn their minds off. Gamifying financial education and finding an active learning curriculum to demonstrate the incentives of being fiscally responsible connects them to the material in a tactile, emotional way not presented by merely talking to them about the subject.
From there, connect it to their reality. If you are their parent, sign them up for our Essential Student Checking account here at McHenry Savings Bank. This package allows teens to have their own personal checking account with your help in managing it with them. It also gives them access to their own e-statements, bringing interactivity to their banking experience in a hands-on way, similar to the active learning in finances they receive.
For more information about our Essential Student Checking and more, visit our website and be sure to follow us on Facebook. To discover more helpful tips in financial literacy go to FDIC: Learn Money Smart.