We're always talking about financial literacy. And how we need more teen money lessons. So, how do our teens learn about money?
If you've got kids, you probably want them to make good decisions — especially when it comes to money. But how do we teach teen money lessons?
Well, I've been known to drag my son from lender to lender, watching me get denied for a relatively small amount of financing so we can talk about it. (I also then show him that I can still accomplish my goals, because investing.)
But there are other ways to help kids learn about money.
Money Courses and Games
First of all, there are money courses and games. My friend Scott runs the Best Academy, which has different money course tracks for kids, teens, and adults.
My teen son went ahead and tried out the teen finance course and, for the most part, liked it.
Here's what he wrote about it:
I like the information and the idea of teaching teens about money and saving early on. I do like the fact that someone with the experience in going from rags to riches is talking about his life experience.
In addition to the advantage related to learning about money from someone who has lived it, and has a straightforward and engaging approach, my son also mentioned that there are good facts provided about money, as well as information that helps kids work through new thoughts and ideas.
In addition to taking teens through lessons, this teen money course also offers discussion questions and encourages kids to think about what they can use their money for. It's goals- and values-based, helping those taking the courses see the importance of using money as a resource.
There are courses for younger kids, as well as money lessons for adults. Going through the Best Academy can be a good way to get a handle on basic money concepts and make the most of your finances.
Playing money games
No, I'm not talking about Monopoly. Or even Life. Both of these games can provide instructive lessons for kids, but I really like my friend Paul's CashCrunch game.
The point is that it's possible to engage your kids when it comes to money topics. However, to be effective in the long run, you need to pair these resources with family discussions about money and make sure that you're keeping communication lines open.
What About Financial Literacy in Schools?
Everyone complains that school should be teaching financial literacy. However, many schools do teach financial concepts through math.
I do agree that we could probably do a better job. One thing I like that my son's school is doing is that, as part of math class, they're using a simulated budgeting program. They have to make decisions like getting a car loan and deciding what to buy.
My son is “investing” during this class and making reasonably smart decisions.
The weird thing, though, is that he was forced into getting a loan for his bike. He was actually annoyed enough that he came upstairs to tell me about it.
Rather than buying a car and paying the higher costs, he decided that a bike would be a good way for him to get to work. He had the money for it in this simulation.
As you can see, even though he made a “down payment” of $250 — the cost of the bike — he still had to “finance” it and was stuck making payments, including paying $50 in interest.
The program wouldn't let him just buy something outright. He had to finance a mode of transportation. Overall, the program looks pretty solid. He's making investing decisions and having to pay bills and manage his income.
Is debt really necessary?
But I don't like how it makes it seem as though you have to use debt. And this is coming from someone who's perfectly fine using low-interest debt to leverage her lifestyle and meet her goals.
The fact of the matter is that, while, yes, kids need to learn about money and debt, and how to use debt responsibly (if they end up using it), forcing them into it probably isn't the answer. Instead, my son should have been rewarded in the simulation for saving up and choosing a mode of transport that was more financially responsible.
Yeah, debt can be useful. Yeah, there are times that it's part of the deal. But if you can avoid it and make other arrangements that are better for your finances, do them. I'm not sure this method of normalizing debt is the best approach.
This brings me back to the key: you need to have discussions.
Talk to Your Kids About Money
In the end, no teen money lessons or courses or games are going to do the job on their own. You need to talk to your kids about money. Make it a point to:
- Discuss how you choose your priorities
- Trade-offs that sometimes need to be made
- The realities of credit card debt and other high-interest debt
- What's needed to start investing
- How to open a bank account
- The steps to making a spending plan
When the topic arises, I do try to talk to my son about money. When he asks questions, I try to answer them.
Do I always remember to bring attention to important lessons? No. Are there things I'm probably forgetting? Sure. But if you can, start young to talk about money, how it works, and what matters.
If you ensure that money isn't a totally taboo topic, teen money lessons are easier because you're not starting from scratch. And, hopefully, it leads to your kids being functioning adults, ready to make the most of their own money in the future.
How do you teach your kids about money?