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Teaching Kids About Money: Preparing Teens for Financial Independence

I’m guilty of it, and you probably are, too. Some nights I allow my teens to push their chores aside so they can concentrate on homework instead. I’ve also allowed them to load up on extracurriculars that will beef up their college application, in lieu of them getting an after-school job. In general, I look at their long-term success in terms of what college they will get into, or what they accomplish academically.

But it turns out I may actually be missing the most important ingredient for raising successful adults: financial independence. It appears I’m not alone in this. According to a survey of 1,000 teens conducted by Junior Achievement USA and the insurance firm AIG, while 75 percent of teens see graduating college as a priority, only 50 percent view achieving financial independence from their parents as a priority.

Have we as parents made a mistake? Did we stress the need to get into a good college at the expense of other key life skills, like achieving financial stability?

And if we have, what do we do about it? Financial independence and stability are an important part of being an adult. But according to this study, our kids may not have gotten the message.

Here’s the good news: Experts agree that it’s never too late to teach financial literacy. Teens ages 13 to 15 can learn skills like budgeting and experimenting with investing in the stock market, says Alexander Lowry, professor of finance at Gordon College in Wenham, Massachusetts. While financial literacy isn’t the same as financial independence, literacy can help teens feel more equipped to build towards that independence.

Parents should encourage older teens to get jobs and teach them how to bank and manage their earnings. Lowry encourages teens to get credit cards so they can learn about paying their balance off in full and the importance of establishing good credit.

But it’s not just about financial expertise. It’s about building self-esteem and confidence around these issues, says Leanne Jacobs, author of Beautiful Money: The 4-Week Total Wealth Makeover. “Empowering teens to make smart money decisions—like saving half of every paycheck as well as learning simple money management strategies—will build strong and resourceful adults,” she says.

Jacobs also encourages parents to discuss future financial arrangements with their teens, like who will be paying their phone bill after they graduate college, or whether they will be asked to contribute to rent if they choose to move back home. 

“Setting clear boundaries and a healthy foundation is key,” Jacobs says. “Having frequent and healthy conversations about money and who will be responsible for what down the road will only enhance and optimize success.”

Wendy Wisner

Wendy Wisner is a mom, a writer, and a board certified lactation consultant (IBCLC). She is the author of two books of poems (CW Books) and her essays have appeared in The Washington Post, Huffington Post, Scary Mommy, Club Mid, xoJane, Role Reboot, Your Tango, and elsewhere.