What Teens Wish Their Parents Taught Them About Money
Last month CommunityAmerica hosted a free parent webinar after interviewing 300 teens (high school and college students) about what they wish their parents had taught them about money. There were three key learnings that I’m going to break up into a series over the next three weeks. I’ll share advice parents can pass on to their teens in the areas of spending and saving, building early credit, and investing in the teen years. We’ll also share the advice we gave participants to set themselves up for success in these areas. This week we’ll focus on spending and savings.
Listeners were surprised to hear that of a diverse cross-section of participants from different income backgrounds across the metro, 80% associate the word ‘money’ with stress. Most of these students are only just now experiencing their first job and don’t yet have the financial responsibilities of post-graduate adulthood. Yet, based on experiences with either their parents or in the community, they already express feeling stressed. When money is managed effectively it can represent opportunity, not stress. What are a few things these teens wished they knew?
Small Expenses Add Up
Many cited food expenses and struggling to say no when asked to grab a bite with friends as a pain point with money management. Don’t worry, kids! This is something adults struggle with too. The advice? Create a budget that includes entertainment. I can’t stress enough that if you budget for some fun you are more likely to stick to your budget. During COVID it’s less likely that people are getting together as frequently, at least in the traditional sense. If frequent Chipotle runs have got your teens down, encourage them to give some thought to cutting back to one trip per week and they’ll have something to look forward to! It sounds very simple in theory, but remember that for many, this is the first time they’re exercising a new kind of discipline. From their perspective, they have new limitations and will need to establish new societal boundaries.
It’s interesting that in some instances, having parents financially help can have a non-positive outcome. Within the webinar, several students commented that when they or their friends were given money regularly by parents, it set unrealistic expectations for how things would go when on their own income. Once they had access to far less money or had to manager their own bills, they found it more difficult to prioritize than ever before. Our advice? Even if you give your kids some money to help them out, encourage them to put some into savings instead of using it all for fun money. Then when they’re working and paying bills independently, they’ll have a little extra should they need it. For the teen years we recommend 10% savings, and to make it easy, they can set up direct deposit with their financial institution that automatically allocates to savings. They won’t even see the money!
How to Set up a Budget
Research shows that many adults don’t set up a proper budget. Therefore it’s reasonable to expect that many don’t show their teens how to create one either. What’s surprising is that many teens wish they did have that knowledge. Our advice? Teens can start by tracking their spending for 30 days to see where their money is actually going. How much they bring in, how much they’re spending, and on what. From there, get a budget going and track it diligently by mobile device. It’s also smart to set up alerts so they can stay within their budgetary parameters and take advantage of deals whenever possible.
You can watch the full webinar here, and we’ll be back next week with some tips about establishing early credit.
Kat’s Money Corner is posted in the Kansas City Star every week. Kat Hnatyshyn, when not blogging or caring for her little ones, is a manager with CommunityAmerica Credit Union. For more financial chatter, follow us on Twitter @CommunityAmerCU.