If you open up TikTok, YouTube or any other social media platform, you won’t need to scroll for long before finding bad financial advice. Growing up, most children and young adults don’t learn how to manage their finances. Many schools don’t offer the necessary classes or highlight the importance of financial intelligence. In fact, only 23 states require high school students to take a personal finance course to graduate.
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Because society isn’t going to teach your teenagers about money, it falls on you, the parent or guardian, to send the right message. Anthony O’Neal, a podcast host, bestselling author and personal finance expert, tackled the subject in a recent Instagram post. Here are three things you should teach your teen to help them sculpt their financial future.
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The Basics
Since your teen’s school isn’t going to teach them the financial basics, don’t expect them to get their first paycheck and prioritize their retirement over a new video game release or designer bag. You must explain how wealth-building works and how to work toward financial freedom.
O’Neal suggested going with your teen to open a bank account. Make sure they are a part of the process to gain some experience and knowledge about banks. Here are other areas you should cover:
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Banking: Getting your teen a bank account and familiarizing them with mobile banking will prepare them for when they need to make transfers and pay bills as adults.
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Budgeting: Budgeting is an essential piece of financial education. Teaching your teen to track their spending and reach financial goals will move them closer to financial freedom.
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Savings: Saving isn’t as fun as spending, but there are many more advantages. Explain the benefits of saving money, and why they should start creating an emergency fund from day one.
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Investing: While this may be an advanced concept for teenagers, the earlier they start investing, the better. Explain how compound interest and long-term investing can help them build wealth.
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Credit Cards and Debt
One of the most dangerous financial traps teens fall into is debt. When you’re young, it’s easy to accept money without realizing the long-term consequences. Teens can easily apply for credit cards and student loans with the attitude that they’ll figure it out down the road. The Education Data Initiative reported the average person with federal student loan debt owes $37,853, which will take many years to pay back.