Financial Literacy for Teens: How to Create Responsible Financial Behaviors

Consider these 5 points when talking with young people about being more money wise

When it comes to teaching adolescents and teens the keys to financial literacy, there’s always room to improve. And while strides have been made by some schools in the United States to require a more defined financial literacy curriculum, the need persists for a more solid program for teaching the elements young people will need to stay on solid financial footing throughout life.

We understand talking about money can be difficult, especially if you don’t feel highly qualified on the subject. Remember that honest conversations with your children or those you mentor should occur often. This shouldn’t be a one-and-done discussion. Use these points to continue the conversation with your children to have a more positive impact on their financial futures.

Earn a decent living

While roughly 40% of the U.S. population has completed four years of college or more in recent years, it stands to reason that a majority – at least 60% – of those living in America don’t have a four-year degree. And while graduating from college often leads to higher lifetime earnings, it’s not necessary to make a comfortable living for you and your family. Those in skilled trades such as electricians often earn the same or more than their college-educated counterparts depending on where they live. The average salary for an electrician is $25.53 per hour in the U.S. with an additional $8,250 overtime per year, according to a survey of 21,500 salaries reported to the online job site Indeed. That comes out to an average annual income of $61,352.

Spend less than you make

The Covid-19 pandemic is an example of how life is full of surprises, and sometimes places us in circumstances we never expected such as experiencing job and income losses and school closures. Here’s a real-life example: The median household income in the U.S. was $67,521 in 2020, a decrease of 2.9% from the 2019 median of $69,560, according to the U.S. Census Bureau.

More to the point, it’s important to hold something back from every paycheck, because if you spend every dollar you earn, you will have nothing left to bail you out if your car breaks down or you have a medical emergency that keeps you from working. Learning to live below your means can be challenging, but it’s vital to a brighter future.

Save, then invest

It’s a good idea to try and save 15 to 20% of your take home pay (if possible) every week. When you pay yourself first, by saving money from every paycheck and stashing it in a savings account as an emergency fund, you are protecting yourself from a financial crisis. Once you have three to six months worth of living expenses tucked away, it’s time to invest additional money in stocks and mutual funds. Despite the recent market roller coaster, owning stocks can be one of the best ways to grow wealth in the U.S. with a historic return on investment between 8% and 12% for the S&P 500.

Protect your family and financial world

Once you have a job and you begin building a nest egg, it’s wise to protect your investments and future earnings by buying life and disability insurance. Many companies offer these as benefits, along with health insurance, with a monthly deduction from your earnings. If you own a home, purchase homeowner’s insurance. There’s a reason most financial institutions won’t give you a home loan without it. Those who rent or lease their dwelling should purchase renter’s insurance to cover their belongings. It’s often more affordable than you might think and will mean peace of mind.

Give back

Often, our money can mean even more when giving a portion of it away to charitable and worthwhile causes. If you aren’t in a position to donate money, you can volunteer your time and talents to causes you believe in. Research shows that those who volunteer live longer than those who don’t. That’s what we call a win-win.

SavvyMoney, Inc.

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