As your children grow, there will be more opportunity to share knowledge and know-how for responsible money management. The teenage years are an important time to continue—or start–learning how to build a successful financial future.
If you have a child in or approaching their teens, there are many financial strategies that can help them evolve from novice to experienced as they progress toward their financial independence.
You can introduce financial literacy and teach money management in a few different ways:
Add an allowance
Many teens might live in the moment, but financial literacy is crucial for long-term financial success. It’s important to learn how to save money, and children and teens benefit from gaining first-hand experience.
Think of an allowance as a tool to build your child’s financial education. By having them save a portion of their allowance, your child can learn the basics about saving with a hands-on approach.
An allowance can be a versatile tool when wielded properly. With their allowance, you can showcase the power and significance of money management and the value in earning money. For example, you can prepare spending plans that allow for your child to not only save for the latest toy or game, but also set money aside to help others through charitable giving. Additional financial tools for teens include setting up “giving goals” that can help them identify causes they are passionate about as they grow and gain more independence.
Show them the responsibility that comes with finances
Even though they are young, teenagers can often handle – and learn from – having additional responsibilities given to them. As you guide your children down the path to future financial independence, consider elevating their independence and responsibilities over time. The increased autonomy can not only show your trust in them, but it can instill confidence while helping them learn from experience.
One way to let your child show their responsibility is by setting up their own youth savings account. With this financial safety net, your child can work toward measurable savings goals. And the timing couldn’t be better as your child enters their teens and they begin to dream of achieving larger—and more expensive—goals.
For some help with determining savings goals, you can utilize our savings calculator.
Mentor them on their journey
Talk to your child about what’s shaped your financial foundation. Act as a mentor by having open conversations about your financial history, the mistakes you have made, and the lessons they can learn from your experiences.
One of the most important aspects of money management to demonstrate to your child is the rare value of patience. By showing them instances where your own long-term savings goals paid off, you can reveal how to be a master of the craft through mapping out goals. You can also slowly begin to introduce more advanced financial principles, such as compound interest, and the value of accounts like a 401(k) by matching your child’s contributions for long-term goals.
Financial tools for teens checklist
- An allowance: help them learn how to earn and manage money
- Goal setting: navigate the tightrope of finances with a savings account safety net
- Giving back: part of financial independence is recognizing how you can help others
- Connect with a mentor: having a guide and teacher to lead the way is invaluable
With access to powerful financial tools and your expert mentorship, you can help prepare your child for financial independence.
UMB personal banking solutions offer convenience and simplicity to meet all of your past, present and future financial needs. From home loans to auto financing and everything in between, see how UMB personal banking can work with you to find the right products for your life and lifestyle.