Is Your Teen Ready for Financial Independence

This year, our summer vacation travels brought us together with friends and family near and far – in many cases, seeing people again for the first time in years.  Not surprisingly, the changes in our children were most striking – they were all taller, more independent and some even possessing that distinct, worldly air of newfound teenage-hood.

From driver’s licences and first jobs to high school graduations and university applications, our children are growing up fast and we’re racing to keep a step ahead.  And of the many life skills we all want to make sure our teens have in their tool kits when they first fly the nest, being financially literate tops the list.

So if your teen has conquered laundry and scrambled eggs, but still needs some prep for managing their money as an adult, these tips can help get them ready for their future financial independence.

Start early

As the saying goes, “the earlier the better”, and this adage certainly applies to teaching kids about money. If you’ve still got little ones at home, the moment they stop putting coins in their mouths is about the perfect time to get them started on learning the financial basics.

All it takes is a little allowance or occasional spare change to help them practice good habits for thoughtful spending and saving, including gift giving on a budget and even setting money aside for charitable giving.

In reality, kids and grownups of any age can always benefit from a refresher on these fundamental money skills – perhaps “it’s never too late to learn” is really the take home message when it comes to teaching our kids healthy financial habits.

Teach them to budget

Let’s be honest here, I’m not sure anyone truly enjoys making a budget, but we can probably agree it’s a life skill that pays off time and time again.

If your teen is heading off to college or university, or about to take on some of their own financial responsibilities, you can give them a good head start by setting up a simple budget detailing their expenses and income.

Make sure they include all their monthly expenses, as well as their daily and weekly spending on things like bus fare, coffee and even laundry. With even the simplest of budgets, your teen will then be equipped with a realistic picture of the maximum amount that they can comfortably spend in a week or month. Even better, they’ll have a better chance of making sure their expenses are covered and their savings last.

Take them to the bank

Teens need a bank account in their own name, with their own debit card, and the knowledge and practice to use it responsibly.

Youth and students generally get a free or discounted chequing or savings account, and it’s a good idea to make sure they understand what and how many transactions are included with their type of account. Take them to the bank with you, maybe even setting up an appointment with an advisor at your local branch, to make sure they have all the information about where their money is and how to best access and save it.

Also make sure they know how to bank online, how to send and receive e-transfers, pay their bills online and how to set up all the apps on their phone or most-used device. Help them store their passwords, account numbers and other important documents like passports and social security numbers somewhere securely – and keep a back-up record in your own files.

Talk to them about credit

The topic of teens and credit cards is always up for debate. There are likely as many arguments to be made in favour of young adults needing their own credit card to launch their own independent financial life as there are for keeping them away from this easy way to rack up debt.

Whichever way your family decides, it’s worth noting that credit card companies often spend a good amount of time on post-secondary campuses offering application forms to students – so at the very least, it’s a good idea to explain the basics of responsible credit card use  to your teen now versus later.

In addition to making sure your teen understands the basics of borrowing, making payments and the impacts on their credit score, you can also help protect them from accumulating credit card debt with card options such as low monthly spending limits and pre-paid credit cards.

Keep the conversation going

Like most of parenting, it is fairly straightforward to teach our teens about healthy life habits and skills when time and money are plenty and stress is low. But don’t overlook the opportunity to teach them about spending and saving wisely when life and finances are a little less than ideal.

Hearing a few stories about how you might have lived off of peanut butter and jam sandwiches for a week or two, bought all your clothes second hand, or sold your entire collection of Spiderman comics to pay your rent, can help prepare your teen for thinking creatively when money is tight.

Strategizing about their ability to pick up odd-jobs like lawn care, pet care, casual shifts at the local coffee shop or bookstore, while still making enough time for studies, can also help them feel more secure about having enough money to meet ends meet.

Most importantly, make sure they know what help is available to them on campus and in the community when times are tough. Be sure they understand that there is no shame in accessing programs like student food banks, not-for-profit tax and finance clinics, student bursaries and even social assistance.

Above all, if your teen knows they can always call you for input and advice, or to just be a compassionate ear to listen to their money woes, they might have just learned the best lesson of all for their independent life – that there are no troubles too big or too small that can’t be solved if you just ask for help.

Carmen Kinniburgh

Carmen Kinniburgh is a freelance writer and editor exploring topics and ideas about parenting and families, Canadian science and research, health and medicine, as well as travel and lifestyle. Born and raised in Alberta, Carmen has also lived in Southern Ontario and Manitoba, where she worked in professional communications for a university and a national health charity. Currently living in Thunder Bay, Ontario, she gets all her best ideas and insights for Parentwise from her own three delightfully precocious children.

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