Keep Your High Schooler Money Smart

Raising Money Smart Teens

Raising Money Smart Teens!

Helping your teen gain the skills to manage money well and build a strong financial future for themselves is an important task. Teaching your teen to be money smart actually begins when your children are young with the most basic understanding of money and spending.

By the time they reach high school its time to work on advancing their financial fluency and help them move into new territory on the issues of spending and managing their money.

Taking the time to handle this issue well and communicate to your teen in an effective way so that they actually take the skill into adulthood and apply it is well worth the effort.

Here is a look at three areas where working with your teen to become money smart will pay dividends in their future.


money smart teens

…Credit and consuming

Using credit cards is a lesson best learned at home, where you can guide your teen and help the young person through mistakes. To begin, explain the pros and cons of credit. Most teens don’t know that it’s borrowing. Credit is convenient and can be a wise way to finance purchases.

But warn your teen about the costly dangers of debt. Together, read a credit-card statement, and show your teen how many small purchases can add up over a month. Point out interest rates (and their totals) as well as penalties for late payments. You can introduce your teen to using credit with a low-limit joint credit card: you cosign for a card in your teen’s name. You cap the amount to match the portion of allowance that you and your teen have agreed to. Your teen is totally responsible for the bills – which must be paid IN FULL each month.

This is the crux of the exercise. Review monthly statements with your child. Do NOT help your child out of debt. If your teen overspends one month, he loses spending privileges until the debt is paid in full. You can also tie a credit card to a teen’s saving account, which means the limit on the card equals the amount in the savings account. The risk and consequences of overspending is serious in this arrangement. Kids can not only wipe out their savings early, once savings are gone, the teen no longer has a card to practice with…

…Keep work in perspective

Teens who have too many desires as consumers will sacrifice time spent learning for time spent working instead. Educators recommend that high school students work on weekends and during summers. During the school year, teens need time to be students, not employees.

Often students avoid less demanding college prep courses, instead, they take “easier” courses to lessen the demand that school puts on their work time. It’s a big mistake that costs them in college.

Save for college

This is a time when teens should focus on saving. College expenses are right around the corner. Your child should contribute a part of his earnings, even if it’s only to accumulate spending money while at college.
– via

Math Courses Help Kids Become Money Smart

Studies have shown that requiring students to take financial courses in school has little impact on their personal financial health in later years, however, math courses are different.

Understanding math skills and being able to apply them can result in teens applying this math knowledge to their own personal finance in future years.

“…A lot of decisions in finance are just easier if you’re more comfortable with numbers and making numeric comparisons,” says Mr. Cole.

Without strong math skills, he says, people tend to use more emotional ways to invest, spend or save their money. What’s more, people with less math experience make worse financial mistakes with issues like compounding or underestimating how quickly interest accumulates.

He says the math courses don’t need to be complicated, but should teach about concepts that come up a lot with money, such as exponential growth, which come in handy when thinking about compounding…

Parents Can Teach Their Teens To Be Money Smart

Unlike the lack of impact that school financial courses have on students later on in life, parents can help their own children learn about money and apply what they learn so they can take that money smart knowlege right into their adulthood.

Here are two important ideas for how to teach your teens about money. First how important it is to talk to them openly about your family’s finances and next how using the idea of “just in time” education is very helpful in translating financial learning into good financial habits.

…Often, parents fear causing their children anxiety or think talking about money is impolite. The problem is, keeping these secrets often caused more anxiety than telling the truth…

…And the negative effects of that childhood anxiety can last into adulthood. In other research, Ms. Romo found that subjects who report limited communication with their parents about money later in life feel “clueless,” as if they don’t truly understand how credit cards or money management works…

…Trips to the store are good moments to have these conversations, says Anita Vangelisti, a professor of communication at the University of Texas at Austin. Parents might explain why buying one item makes more sense from an economic perspective than another, comparing quality, price, benefits and the family’s general budget…

…In a meta-analysis of over 200 studies that was published in Management Science last year, Mr. Lynch and two other professors found how swiftly the effects of one-time financial instruction wear off. About half of the studies were about the effects of financial education’s impacts on behavior. Their analysis found that the impact of one hour of financial instruction wore off after about five months. Eighteen hours wore off after around 17 months. And 24 hours disappeared after about 20 months…

…The professor believes his findings lend support to an increasingly popular strategy among financial educators and policy makers called “just in time” education…

…So, instead of giving information about car loans to students in a textbook, consumers would get the information as they started shopping for cars.

Parents can adopt this technique, too.

“Let’s say you want to teach your child about budgeting, and you know that every year, Aunt Ethel writes your child a $50 check for Christmas,” says Mr. Lynch. “The moment to talk about budgeting is just before that happens. If you have that conversation a few months before or a few months after, it’s not going to have an effect.”
– via WSJ

Have you had success teaching your teens about finances?

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