What do teenagers need to know about money?

The teenage years bring a new set of financial challenges and opportunities. While it may not be top of their priority list, this is exactly when young people start to seek more independence and that often comes with money. It’s a crucial time for parents to help their children develop practical financial skills and sound judgement.

Teenagers need space to experiment and make mistakes with small sums, learning as they go. Setting up bank accounts, using a cash card, and understanding wages and saving are all important steps. Conversations about money should be open and ongoing  whether it’s everyday budgeting or topics they’ll encounter online, like cryptocurrency or investing.

Financial journalist MOIRA O’NEILL says parents should also help teenagers recognise the influence of social media, particularly when it comes to unrealistic promises of quick wealth. By focusing on long-term thinking and responsible choices, families can lay the groundwork for a lifetime of financial confidence.

Key takeaways

Teenage years are a crucial time to start developing healthy money habits and management skills to prepare them for financial independence in adulthood.

Parents should guide teenagers in understanding the value of money by encouraging thoughtful spending, saving for desired items, and distinguishing between daily spending and saving for special purchases.

Open family conversations about various financial topics, including investments and the difference between speculation and long-term strategies, are essential, especially considering the influence of social media.

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Transcript

Robin Powell: The teenage years can be difficult for children and parents alike, and learning about money might seem like a low priority. But if young people can develop healthy attitudes and money management skills while they’re still at school, it’ll stand them in good stead for early adulthood and beyond. Here’s the financial journalist — and parent —Moira O’Neill.

Moira O'Neill: When your children get to be teenagers, money becomes something that gives them a bit of independence and I think it’s very important that they start learning to manage that because, in the blink of an eye, they’ll be off and they’ll be adults and they’ll be away in higher education or starting their first job. They will need to know how to manage money. You’ll need to open a bank account for them, get them a cash card, teach them about things like the minimum wage. If they’re going to go and get a job, they can start thinking about what they might be paid.

RP: If they haven’t already done so, it’s important that teenagers learn the value of money. Parents should encourage them to think carefully before they spend it, and to save up for things they think they want and can’t yet afford.

MO: I think they should have a daily spending pot that maybe you give them money for as parents; and then if they get given money for special occasions — birthdays, Christmas — by other family members or friends, they have a special savings pot that they build up funds for special purchases. So I think it’s very important for us to have conversations about money and to not feel uncomfortable about talking about money as a family. I think you should be talking about it at the dinner table: things like pensions, long-term savings, retirement, the stock market, cryptocurrency, all of those things a teenager might come into contact with on social media.

RP: As Moira O’Neill says, whether you like it or not, social media will play a big part in your teenager’s financial education. They’ll see other people making a quick killing on, say, bitcoin, or the latest hot stocks. Crucially, you need to help them understand the difference between speculation and sensible, long-term investing.

MO: We cannot protect our children from making mistakes. In fact, making mistakes with relatively small amounts of money at the start is probably the safest space to learn because you only have that small amount and therefore I would just encourage them to get involved and to spread their money around, and experiment a bit. Give them a few years of doing that, and they’ll be well set for a lifetime of investing because it’s not just age 20 to 25, you’re potentially investing until you’re 80. So lessons learned at the start will be incredibly valuable.

RP: Of course, young people generally like watching video. Thankfully, there are some helpful videos and documentaries out there, which you may be able to steer them towards. You’ll be doing them a great favour if you do.