Add Some Financial Smarts to Your Teen’s Education

As the new school year starts, teens will be diving into history, science, math and English lessons. One important subject they may not be learning about, however, is money management. As the financial choices people must make in their lifetime become increasingly complex, teens need to learn how to navigate the financial world.

Michaela and Joshua are just two of the close to 120,000 teens who have become money savvy, thanks to Boys & Girls Clubs of America’s (BGCA’s) Money Matters: Make it Count program, sponsored by Charles Schwab Foundation. Michaela, 17, says she didn’t know much about money management before participating in the program at her local Club in Tucson, Arizona. With a new understanding of money management, and savings from her part-time job, she feels much better prepared to save and budget for college in the fall. But Michaela’s new personal finance skills have done more than help her alone. After completing the program, she signed up as a Money Matters teen mentor to her peers. She’s also been able to teach her mother how to more effectively budget and organize bills.

Joshua, 17, grew up in a single-parent family of four, and always knew that money was tight for college. After participating in Money Matters at his local Boys & Girls Club in the Washington, D.C., area, he also feels better prepared to make financial decisions to help him reach his goal of graduating from college with a degree in mechanical engineering. He has opened both savings and checking accounts, and now saves money by limiting what he spends his money on. “Having stronger money management skills will definitely make college life easier,” he says.

The Money Matters: Make it Count program was created to promote financial literacy among 13- to 18-year-olds by building basic money management skills. “The program aims to provide teens with valuable hands-on experience, which is the way teens want to learn,” says Roxanne Spillett, president of BGCA. “Through fun activities and exercises on topics like using a checking account, managing debt, saving for college and the basics of investing, teens are gaining the practical understanding to deal with the financial challenges of our world today.”

Parents agree that the best way for teens to learn about money is through hands-on experience, according to the Charles Schwab 2008 Parents & Money Survey. Unfortunately, only one in five parents involves their teen to a great extent in the family’s budgeting and spending decisions, and one in four don’t involve teens in these important activities at all. The good news is that teens are interested in learning about money. In fact, 60 percent of teens agree that learning about money management is one of their top priorities, according to the previous year’s Teens & Money survey.

“Whether at home or through programs like Money Matters: Make it Count, it’s critical for teens to learn about and begin applying the concepts of budgeting, using credit wisely and saving,” says Carrie Schwab-Pomerantz, chief strategist of consumer education at Charles Schwab & Co., Inc. “Teaching them how to use financial tools like checking accounts, savings accounts, debit cards and credit cards can better equip them for the important choices and decisions they’ll have to make as adults.”

As you get your family ready for the new school year, take a few minutes to help your teens learn more about personal finance. A little information will help them make good financial decisions during the busy year ahead. Here are some practical tips:

1. Include them in discussions about the household finances. Make discussions about the household finances a regular part of everyday life. Current events in the economy provide additional opportunities for family discussion.

2. Be prepared for their financial rites-of-passage. Whether it’s a first job, saving for a car, using a credit card, or saving for college, real-life events provide opportunities to bring basic financial concepts to life.

3. Teach them how to use financial tools like checkbooks, saving accounts and credit cards. While your kids are still under your roof, you can teach them how to save, use a credit card wisely and the importance of balancing a checkbook.

4. Encourage them to participate in the BCGA Money Matters: Make it Count program. Find a nearby Club at www.bgca.org/clubs.

For more tips on how to encourage good financial habits, as well as calculators and tools to help bring money lessons to life, visit www.schwabmoneywise.com.

Courtesy of ARAcontent

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“When it comes to helping their kids learn about making good money decisions, parents have much more influence than they realize,” according to Meridee Maynard, senior vice president of life products for Northwestern Mutual. “And it’s really never too early to get started — even today’s preschoolers know what money is. Plus, there are lots of lessons to be learned about money and its uses before kids get to the impressionable teenage years.”

In 2006, teens spent $195 billion. While teens have proven they can spend, their understanding of money is severely limited. Every other year, Jump$tart Coalition for Personal Financial Literacy tests the nation’s 12th graders on the basics of personal finance. In test after test, students have averaged a failing grade.

The Jump$tart scores are just another sign that parents have to talk to kids about managing money. The lessons should start early and build on each other. Says Maynard, “Even the most mundane activities can provide an opportunity for short, but meaningful, money lessons. Kids can help with the grocery shopping, so they can get an idea of what their favorite items cost. A trip down the snack aisle can spark a lesson about brand-name versus generic prices.”

To get additional practical — and fun — ideas, check out Northwestern Mutual’s newly redesigned Web site for teaching kids about money, www.themint.org. The site helps families begin and continue the money conversation. There are lots of interactive pages, along with a parents’ section to help create teachable moments. Here are just a few highlights:

A 401 (kids) program.
Parents can pledge to “match” any money a child saves. Every two weeks, parent and child can sit down and count the savings to see that money grows and that saving can be fun.

Four banks, not one.
Here’s an idea more effective than a single-slotted piggy bank. With four banks, kids can separate their money by goals: a bank for spending, saving, investing, and donating. It’s as easy as finding four plastic jars and labeling them. Younger kids can decorate the jars with pictures to keep the goal of each bank in mind.

Shopping smart together.
When kids are young, parents should try to show youngsters ways to stretch their dollars: choosing alternatives to designer brands, buying on sale but not on impulse, judging quality, recognizing gimmicks, and making good decisions.

Modeling restraint.
Parents who don’t head to the mall for every big sale teach the difference between needs and wants. Parents who explain why they cannot buy that new flat-screen television introduce the topic of thoughtful spending. Then the lesson can be taken to the next level: unplanned or impulse purchases undermine the family budget.

Money “show- and-tell.”
Bill paying time is a great time to talk about the cost of living. Here’s how. A parent chooses a group of bills to be paid. Using cash or play money, the parent stacks singles, fives, tens, and twenties on the kitchen table to pay the bills. As each bill is paid, the parent removes money from the stacks and keeps a running total. It’s a great exercise that makes the point visually and dramatically.

Lessons in money management don’t need to be complex. By keeping it simple, kids can reap the rewards of being money smart — something that will pay dividends for years to come.

Courtesy of ARAcontent

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