Parental Issues that Interfere with Financial Education -Two Lessons for Teens
by Jill Suskind

When young adults mismanage their money, they suffer AND so does everyone else!  We cannot afford to marginalize financial education any longer.  As individuals and as a country, it’s no longer acceptable to say “I will let my children learn about finances later.”  We have learned that this attitude breeds generations of adults who don’t know how to manage their money. 

One of the primary responsibilities of a parent is to prepare their children to be financially competent and confident.  I watch my friends with children who have very exciting resumes—they sing, they dance, they play football, they volunteer…all great things.  And, in the background, a nasty monster is growing, and it’s called “YOUR CHILDREN CAN’T MANAGE THEMSELVES AS ADULTS.”  And it really looks like it’s not a big problem, because for so many generations, we have “survived” this reality, rather than transforming it. 

Financial illiteracy is VERY easy to avoid.  Teens who know how to manage their money are empowered; they love it!  As a financial educator for teens, I spend most of my time listening to people share  how and what they learned about money and money management as teens, and very, very few people can say that their parents taught them how to think about and manage their money in a way that really prepared them for adulthood.  Those folks who DID have this benefit are wildly grateful, though, and they feel very sorry for people who didn’t learn these tools.  AND they have more money!

Here are some common mistakes parents make as financial educators:

1.     Allowance with no education:  Teens practice poor money management skills with their allowance this way.  There’s no getting around it:  the habits and attitudes they learn in your home will stay with them their whole lives.
2.    No allowance or income:  Teens practice poor money management skills this way, too!!  They learn about money from this experience, too.  Maybe they learn that money is theirs for the asking, or they learn that money is always managed by other people.  
3.    A “ Spend, Save, Give” level of financial education:  This kind of training is perfect—until age 12 or 13.  After that, teens can learn to manage their money on a much more sophisticated level.  They should have at least six categories of money management by this time; categories that match their lives, so they can see that they can design their lives and then use their money to afford to make their dreams come true.  Teens can handle much more than spend, save, give.
4.    Financial education is much more than teaching about credit cards and how they work.  Financial education is more than teaching about checking accounts, savings accounts, and insurance.  Financial education is more than teaching about how adults budget their money and run their household.  Financial education is more than teaching your teen to save for a car.  However, all those things are important and part of the big picture.

The biggest problem is that parents don’t know what to teach their teens, so they just avoid the issue.  This is a culturally acceptable way to protect ourselves, since we don’t want to admit that we don’t know how to provide this education.  Personally, I was entirely unaware of how financially illiterate I was until I started to take lots of courses about it.  I thought I had no money because I had a small income and that was that.  And I was so frustrated about it, that I wasn’t very open to hearing people tell me there was something I could do to empower myself.  Looking back on those years, I can see that I just didn’t have an effective system for managing my money, and I was a victim of my own ignorance, allowing my own frustration to keep this situation in place. 

I finally got out of it by admitting that I had a problem to the right people, and they helped me by actually managing my money for a while, and then giving me back little parts of the job at a time, so I could take small steps and make them habits before I took on more.  Please keep in mind, I wasn’t a person with an unusual problem; I didn’t spend excessively or gamble or buy TVs or anything.  And I paid all my bills, most of them on time.  I was very average and ordinary;  I had average, ordinary money skills. 

The thing that shocks me now is how easy it is to learn better skills and how much different it is to live life with better-than-average money skills.  It makes more than a little difference!!  I have confidence instead of anxiety in the area of money; I know what I am saving for and when I will have the big ticket items that are important to me; I have peace of mind where I used to feel that my money controlled my life by limiting it.  I buy what is important to me, so my life and my values are aligned, and that makes me feel a sense of integrity that I can’t quite describe.

What can parents do to provide a better-than-average financial education?  Here are a few basic concepts:

1.     PAY for your teen to take courses, with friends and online.  This teaches one of the basic rules about money:  Pay for what you value.  If financial education is important to you, be willing to pay for it.  Free programs about money are not necessarily better than those programs that charge a reasonable fee.
2.    Make sure your teen has many opportunities to explore the topic of money.  Your teen can participate in one or two programs each year, and have a few “take aways” from each.  Now you are teaching your teen the great lifelong practice of continually learning about how money works.  In the same way that you encourage your teen to be a lifelong reader, you encourage your teen to be a person who learns about money in an ongoing way.
3.    Make sure that your teen to knows MORE about money than you do.  That requires you to be secure and confident as a parent.  For most people, it is the mark of success and the ultimate goal that your teen knows MORE about money and has BETTER money habits than you do.  That’s a tough one to face, as a parent.  It makes sense to outsource this part of parenting, so your teens get the benefit of a higher level of financial education than most of us got!

Here are some lessons you can do to get started:

1.    Start a money journal.  I put this one in EVERY set of lessons I offer, because it is the most powerful, effective strategy there is for building wealth and managing money.
Part 1:  Designate a journal, decorate and/or label it, and set it up so you can track what you buy, how much you pay for it, and when you bought it.  You can also track the category of the item (charity, necessity, education, big ticket item, fun money, future financial freedom, and income)

Part 2:  List all the reasons why you might not keep an accurate money journal.  Then write a few sentences about how these reasons would impact your life if you made them lifelong habits.  This is a powerful exercise, since everything that interferes with this practice is exactly what interferes with having enough money to afford the life of your dreams.  In other words, the habit of putting money off until later might be one that gets in your way.  The habit of thinking “it’s not that important” gets in the way.  The habit of thinking “Money is boring” gets in the way.  

2.  Write a website report.  Explore the worldwide web for interesting websites about teens and money.  Write an essay about your favorite one and why other teens would like to read it.  Post your essay somewhere that other teens can read it.  You’ll be surprised at how many websites offer thought-provoking material that you will enjoy.