5 Essential Things to Teach Your Teens About Money

When it comes to money management, most of us wish we’d learned more at a younger age. If we’d gained enough financial knowledge or established better habits early on, maybe we’d be better off now. Credit cards, tax returns, and debt management are true realities of being an adult. The Pythagorean theorem and Newton’s laws of physics are important, but why weren’t we taught more about these things in school, too?

Behind every adult who struggles financially, you’ll often find parents who didn’t teach them enough when they were young. Great financial skills start in the home; in fact, 70% of college graduates say they learned their financial skills from their parents. As a parent, it’s critical that you teach your kid about money when they’re a teen to prepare them for their adult life. But where do you start?

Here are five things you should teach your teen about money to set them up for future success.

1. All things credit

One of the first things you should instill in your teen is credit smarts. If you don’t, they may never build credit, or worse, they’ll rack up way too much credit card debt. Establishing credit is important, but too much or too little utilization can be dangerous.

Teach your teen why it’s important not to rely too heavily on credit. When they’re old enough, encourage the use of a starter credit card to build credit. Make sure your teen understands how credit works. Here are a few things to make them aware of right off the bat:

  • Keeping credit utilization low will ensure a healthy credit score. Don’t use your credit card for every purchase.
  • Credit scores are important for providing access to loans, renting apartments, etc.
  • Credit card purchases can grow increasingly expensive due to interest charges on unpaid balances.
  • On-time payments are critical to your credit score.

Teaching teens about credit during their teen years will set them up for a financially healthy future. Make sure you instruct them in the basics from the outset so they can carry those skills with them throughout adulthood.

2. The importance of saving

Fostering a mindset keen on saving is key to raising a financially successful adult. Encourage your children to save a portion of all the money they receive, whether that be from a gift or job. Savings accounts are important for many reasons. Your kids can learn to set financial goals and save for big purchases. They can also watch their money grow over time.

Two of the biggest things your kid will save for at some point in their life are college and retirement. Help your child establish intermediate savings objectives so these goals won’t seem so daunting.

College savings

Taking out student loans is one way for your kids to pay for college. But let’s face it, doing that is going to put them in a tough spot later on. Help them start a savings account specifically for college and establish monthly savings targets. When they see how much they can contribute to their education, they’ll learn to value those essential saving skills.

Plant a retirement seed

Talking to a teenager about retirement might sound crazy, but it’s never too early to plant that seed. The sooner your teen understands that retirement is the biggest expense they’ll ever save for, the better prepared they’ll be. Depending how much income your teen earns, you could even help them open a Roth IRA. Starting when they’re young means less financial stress in the future.

3. Insurance fundamentals

Insurance. It’s not the most fun part of being an adult, but it is a reality. The teen years are usually when a kid will first experience having insurance. If your teen is a driver, car insurance is a great place to start their education. Explain why they need insurance: to reduce financial uncertainty and make unexpected costs manageable.

Whether they’re paying for the insurance or not, reviewing the policy with your teen can be extremely beneficial. On top of gaining an understanding of its importance, they can learn about important concepts like deductibles. This knowledge is useful for all types of insurance.

4. Budgeting basics

Budgeting your income is important at any age. So what better time to get your kid on a budget than during their teen years? Develop a budget while they’re still under your roof so you can work on it with them and help them monitor it.

If your teen is working (something you should encourage), then there’s even more of a reason to start budgeting. You can help them create a simple budget using a spreadsheet. Alternatively, there are plenty of free budgeting apps that will let your teen track spending and monitor accounts with ease.

5. Ways to make money

Last but certainly not least, make sure your kid learns how to make money. Teaching them money management skills is important, but without any money to manage, how will they put those skills into practice? From working part-time jobs to investing, make sure your teen knows how to earn a buck.

Working part-time

Teens have a lot of free time on their hands. Sure, they’re going to school, but they have after-school hours, summers, and school breaks. They’d be foolish not to use a chunk of their free time working.

They might need help finding their first job, though, so act as a resource for them. Tip them off to online job search sites and drive them around town to spot “Help Wanted” signs. Before you know it, they’ll be earning money regularly.


The earlier your teen gets started investing, the better off they’ll be. Once your kid sees their first return, they’ll want to keep it up.

Investing is an essential part of good money management; it’s key to both present and future financial security. Start teaching your kid now about passive income and growing their wealth. They’ll thank you later when they have a second stream of income.

As a parent, it’s crucial to teach your teen about money if you want them to have a successful future. Sure, it’s going to take time on your part, but your actions will have a lasting impact. If your children know how to manage their money wisely as teens, those skills will carry over into adulthood. Financial health contributes to overall well-being, so do your part to set your kids up for a secure and happy life.

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