To make training in money management for teenagers useful, the key is to emphasize those topics that are most applicable to their lives. Although each kid is different, most of them will encounter common life experiences that require financial decision-making skills.
For starters, many teens will be looking into buying their first car. As sophomores and juniors, they’re becoming eligible to get drivers’ licenses. They will find training in how to budget for a car purchase, select a practical make and model, recognize all the expenses of car buying, obtain insurance, and apply for a loan extremely valuable at this age.
The next topic of importance is how to pay for higher education. College-bound students need to learn about course and career planning, financial goal-setting, funding sources, and calculating the ROI of education. This supportive type of program in money management for teens is sure to grab their attention.
Another constructive message for teenagers is how to move out on your own. Youth in the upper grades of high school and in college are likely to benefit from such information. Budgeting, savings goals, renting a living space, determining income vs. expenses, and the ins and outs of credit are key topics for young adults getting ready to strike out on their own.
Good programs in money management for teenagers must consider several obstacles young adults are likely to face. For example, what is the financial family situation they inherit? Are they born poor or wealthy; are their parents spenders or savers? Every family confronts its own unique set of circumstances around money. The fortune of birth does affect one’s future finances; but even if kids are born into difficult situations, there’s still hope for change.
Another feature influencing the youth environment is the financial behaviors they’ve established. Behavior is shaped and modeled by kids’ parents, peers, and – of course – advertising. Research has estimated that marketers spend upwards of $12 billion a year to get their products in front of children, and children are exposed to more than 40,000 commercials in a year, says the American Psychological Association http://www.apa.org. It’s not hard to see how marketing can be detrimental to teens’ financial health as they mature.
A person’s emotional relationship with money also forms early in life, and emotions have powerful effect on money management for teens. At this life stage, it’s crucial to help young people develop positive financial attitudes and beliefs in order to become confident, capable money handlers.
But very few teenagers receive any formal financial education. It’s not being taught in school, and parents often fail to give their kids vital money lessons. And those few adolescents who do get training frequently have a substandard experience due to the below-average quality of so many financial literacy programs.
The upshot is that youth are entering the real world unprepared, without the financial systems and support they need to achieve success and security.
Foreclosure, out-of-control personal debt, bankruptcy—these financial problems have become commonplace in today’s news. Yet even though so many Americans face horrific financial challenges, it doesn’t have to be that way for young people. The financial odds may be stacked against them, but if we teach effective programs to promote money management for teenagers, we’ll help them beat those odds.
Money management for teens rarely gets taught at school, which means parents and communities need to step up to the plate. The National Financial Educators Council (NFEC) contends that most current members of the country’s workforce are not contributing sufficiently to their retirement funds. That puts kids on shaky ground since social security benefits are likely to disappear by the time they’re ready to retire.
The NFEC has financial literacy programs available to help remedy these problems. One of the important tenets behind this organization’s approach to teaching kids money management skills is to use practical education before theory-based didactic training or rote memorization. Although it is important that the training be solidly based in theory, students will learn better if they practice skills they’ll need when they become independent. For example, 40 million Americans today do not have bank accounts. Wouldn’t it be important, then, to walk youth step-by-step through the process of setting up an appropriate bank account structure and building a long-term relationship with a financial institution? Such instruction will help young people form positive action plans that will serve them for a lifetime. These are exactly the kind of practical lessons that maximize a program’s effect.
The NFEC supports money management for college students as well as for younger kids. Young adults in college are especially in need of effective budgeting skills so they avoid taking on credit card or student loan debt they become unable to pay back after graduation.
Teaching Money Management for Teens: Take a Financial Success Approach
Today’s economy has many people drowning in credit card debt and struggling paycheck to paycheck to make ends meet. Many others are forced to work well beyond age 65 because they lack adequate retirement funds. According to Walter Updegrave, senior editor of Money Magazine, less than two-thirds of the current workforce has calculated how much they will need to support a comfortable retirement. That’s a huge issue as today’s young people will almost certainly face eliminated or greatly reduced social security and pension benefits by the time they reach adulthood. These financial problems plus many others have made teaching money management for teens a huge priority.
But presenting money management for teenagers needs to be done effectively, to make sure they retain and utilize the lessons. What should people look for in youth personal finance education?
First and foremost, according to the National Financial Educators Council (NFEC), the program should NOT be called “financial literacy.” After all, the overarching goal of teaching personal finance for teenagers is to help youth reach their desired level of financial success. Instead of placing focus on “financial literacy,” a good program might be called “financial success training.” And it should take a practical approach to instruction, providing real-world money lessons that keep students interested and engaged while they get on track toward achieving secure futures.
Concentrating educational efforts on financial success motivates teens to learn money management, and they’re more likely to remember the material. That’s because the lessons will be so much different from the typical classroom fare to which they’ve become accustomed. All the NFEC programs are success-focused and designed to motivate youth to take positive action. Choosing a financial success program that works will make a big difference in young people’s futures.