Raising Money-Savvy Teens
By, Carla Hindman, Visa Canada
When you live with a teenager, it can often feel like they think money grows on trees. But time flies and once they are off in the real world they will soon figure out that it doesn't! According to a poll issued by CIBC, 48 per cent of students are most worried about covering tuition and living expenses for the upcoming year, as well as repaying school-related debt, with 36 per cent expecting to owe $25,000 or more when they graduate. To help equip them for these challenges, it's important that we invest the time into teaching teens about budgeting, saving and smart spending decisions.
With that in mind, here are some tips to help you raise money-savvy teens:
Budget for real financial responsibilities. Consider giving teens real life situations to work with such as family budgets for entertainment or trips. This will allow them to experiment with numbers and see the benefits of budgeting for a goal.
Tech savvy teens. Teens have grown up with technology at their fingertips. As the "on-the-go" generation, they rely on the fastest and most convenient way to receive information, so to reach them you have to speak their language. To help improve their financial literacy, start with sharing tools that can help them learn about how to manage their finances – games and budgeting apps – and of course get them set up with online/app banking.
If your teen is going to prom this season, you can make prom a teachable money moment by helping them build a realistic, detailed prom budget. Explore our "Plan'it Prom" app designed to help teens stick to their budget by tracking spending.
Difference between need and want. Canadian youth are taking on roles as consumers earlier than ever before. "I need it" is a popular expression with teens these days, but are they really needs? It's important that teens know the difference between needs and wants so they can make appropriate financial decisions in their future. One way of doing this is teaching them the working-time value of money – how long it would take them to earn those dollars – to explain the real cost of purchases.
Squash the #FOMO (fear of missing out). FOMO is one of the most influential drivers of spending. By helping teenagers understand that today's spending can have an impact on their tomorrow, they might be motivated to better manage their money. With a little information and determination, you can help your teenagers gain the confidence needed to better assert themselves to make impactful financial decisions in the future.
Digital dollars are still dollars. Teens have become very comfortable with online shopping and spending money at the click of a mouse or touch of a screen. With easy access to online spending and purchases being made at the click of a button, it's important to reinforce that digital money requires the same budgeting as cash.
Be a good example. Teens are old enough to understand the concept of money and can learn a lot from your past experiences and mistakes. Don't be afraid to share challenges, or resources that you used when gaining financial freedom. It's important that they learn about their rights as financial consumers so they feel empowered to exercise them. This includes knowing where to go for help when they need it and the importance of protecting their personal financial information such as their PIN or Social Insurance Number.
Bottom line: There are so many financial tools and tactics available today that are designed to speak to teens in a language they understand – now, we need to keep the conversation going to help educate and prepare them for their financial future.
This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.