Whether you’ve hired a high schooler or college-aged student at your business recently or have teens at home, teaching financial literacy is vitally important. It’s in the best interest of our future workforce to be wise with their money, make responsible spending and saving decisions, and experience financial success.

Teaching teenagers how to be wise with their money can set them up for success for the rest of their lives. This month, Senior Vice President George Butkovich and the rest of the Platinum Bank team shares the top three things you can teach your teens about money. For tips for little kids, check out last month’s blog post.    

1. The Value of Good Credit

Nothing affects an individual’s ability to grow wealth more than credit. Buying a car, purchasing a home, and increasingly, being gainfully employed, are all dependent on having a good credit score. Without good credit, it can be impossible to make the purchases that set people up for future wealth, primarily their own home. While these purchases may seem far off to a teenager, adults know they’re just five to fifteen years away.

The best thing you can teach your teenagers about money is how to build good credit and avoid being burdened by poor credit. Show them what credit card companies and other lenders are looking for when they decide to award a credit card or approve a loan. Help them manage their first credit card and put them on the path toward building credit. And when they want to make decisions that may hurt their credit, take the time to explain to them why it’s a bad idea with real-life, concrete examples, perhaps from your own financial journey.

2. How to Create and Stick to a Budget

Fortunately, people who learn how to create and stick to a budget often do not run into issues with credit. That’s because they are fluent in how to live within their means. They understand the value of the money they make and make informed decisions about how they spend their hard-earned cash. They also know what their financial responsibilities are and what purchases can and cannot wait. You can teach all of these skills be helping your teen create and stick to a budget. Work with them to create a list of monthly obligations, such as gas and car insurance, and discretionary spending, including video game subscriptions and cash for shopping. Then, add up their monthly take-home pay. Does your kid have enough to cover their obligations with some left over? If so, ask them what they’d like to do with that money—do they want to grow it or spend it?

3. Saving for Retirement

Many adults look back at their young adult years and wish they had started putting aside money from retirement as soon as possible. Socking away just $25 a month when you’re young can make a big impact long-term. Encourage teens to incorporate saving for retirement into their monthly budgets. Not only is this a great lesson in deferred gratification, it can help them see how investment tools work to grow wealth. Several savings options are available for teens and young adults with part-time income.  

Financial responsibility and literacy are vitally important for teens and young adults. The foundation you lay during these years sets them up for financial success for the rest of their lives. For more financial tips for kids, adults, and businesses, check out the Platinum Bank blog.

In these times of economic uncertainty, talking with your kids about money is more important than ever. Whether you’ve hired a high schooler or college-aged student at your business this summer or have kids at home, teaching financial literacy is vitally important. We all want children—our future workforce—to be wise with their money, make responsible spending and saving decisions, and experience financial success.

It’s never too early to start the money conversation. Even little kids can start to grasp the idea of being compensated for the work they do and how to decide if it’s better to spend or save their money. This month, Senior Vice President George Butkovich and the rest of the Platinum Bank team shares how you can start talking to your little kids about money. Check back next month for tips for raising financially savvy teenagers.

Teaching Financial Responsibility Sets Kids Up for Success

While no future employer is going to ask for an applicant’s records of piggy bank deposits and withdrawals, teaching financial responsibility early helps set little kids up for future success. Learning the value of paying bills on time, living up to financial obligations, and making wise spending decisions are skills that will serve children for the rest of their lives.

Understanding the Value of Work

Opportunities to teach little kids the value of work are all around you. Take those pesky acorns your oak tree is dropping in the backyard right now, for example. They provide an excellent opportunity to teach 3–5 year olds the value of work. Offer them a penny for every acorn they pick up, then work together to count all the acorns they gather. Dole out their pay and then help them count it. You can use this as an opportunity to talk about how they want to use their money.

Talking about Money with Little Kids

Engage young children in conversations about money. Ask them what they’d do with $10, and use their answers to have a broader conversation about spending and saving. Let them help plan your next grocery trip by perusing the weekly ad with you. At the grocery store, explain why you choose to purchase store brands or brand-name items or buy larger quantities when smaller options are available. Make an appointment with your personal banker to open a bank account in their name, and help them manage it.

Teaching the Value of Compound Interest

Once children are 7–9 years old, they can start to understand the value of compound interest. SVP George likes to use the concept of investing a penny with a 100 percent daily interest rate. It would take just 27 days to make a million dollars! While an unlikely real-life investment scenario, this simple idea can help make understanding compounding interest and savings easier. If you compensate kids for doing chores, encourage them to save their earnings in a savings account, where they can see compound interest in action and reap its benefits.

Teaching financial responsibility and literacy should start when kids are little. The foundation you lay during these years will serve them well when they get their first job, first credit card, first car, and beyond. Check back next month for tips on how to help older kids become financially savvy.