At some point, it became taboo for people to talk about their finances, even with their own children. This has resulted in teens and young adults who don’t know the value of money and really have no idea how to manage their finances. But, there are a few things you can do to help them understand the value of money. Read on to find out more!

Teaching Teens the Value of Money

Talk About Your Finances

The first and most obvious thing to do is to start involving your teens in conversations about your family finances. Let them see you pay bills and be there for discussions about monthly budgets, savings, and other financial information. 

Some families think it's helpful to show their children how much money you make every paycheck. This all will help them to better understand how hard you work and where your money goes on things that aren’t fun. However, breaking down a pie chart into percentages {for example, we spend 25% of our take-home pay on housing} can be just as helpful without laying all your cards on the table for your kids.

 

Convert Money to Time

Take them out with you when you go shopping and convert the price of items into the amount of time you have to work for that item. If they have a job do the same comparison. It can also help to know what your state’s minimum wage is and include that as well. Let them see that the $100 pair of shoes they want will take them {or you} so many hours of work to earn. If you make $10 an hour, that pair of shoes cost more than a day’s wage. This comparison will help them understand how much their daily Starbucks runs cost in terms of time and they might think twice.

 Read More: How to Live on a Budget

Help Them Set a Savings Goal

It can also be helpful to help your teen have a savings goal. For many teens, that goal will be a car. But maybe they want to go backpacking in Europe or something else. Giving them a goal to work towards might encourage them to get a weekend job or find other creative ways to earn money. When they start to handle money for themselves they will be faced with things like buying the latest iPhone…or not being able to go on their Europe trip. Having a goal will help them learn self-control when it comes to spending as well as the important skill of saving.

 

Help Them Get a High-Interest Savings Account

Help your teen get a high-interest savings account and teach them the value of compound interest. Show them how $100 saved now can turn into thousands of dollars if they leave it alone until they retire. Retirement will seem like forever away, which it is, but you can use a compound interest calculator to show them the difference between starting now or starting when they will be your current age. They have age on their side, so this is an important lesson for many teens!

 

Start as Early as Possible

Most importantly, you should get started on all of these things as early as possible. The sooner your teen begins to learn the value of money the more successful they will be with money in the future. The truth is, it is never too early to start teaching your children about money…and it isn’t too late either. 

Read More: Why you Need an Emergency Fund

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