RISMEDIA, April 5, 2010—April is Financial Literacy Month, and the recently announced findings of the annual “Teens and Personal Finance Survey” conducted by Junior Achievement (JA) and the Allstate Foundation, indicate it might be wise to pay a little more attention to the importance of financial literacy–especially with teens.
According to the survey’s findings, 42% of the teens who don’t manage their money aren’t even interested in money management. Despite this lack of interest, 86% still think they’ll be as financially well-off or better off than their parents. The discrepancy between planning and results raises the question of whether or not the next generation is ready to handle their own finances. The Illinois CPA Society suggests parents may have some work to do to prepare their teens for the future. Financial Literacy Month’s a good time to start talking money with your teen, so the Illinois CPA Society shares these thoughts on the subject:
Communicate – It’s not easy to get your teen to talk or to listen, but try to include them in conversations about family finances. Help them build a better understanding about saving and budgeting through real life examples – like why there will be no vacation because the roof needs to be repaired or being able to buy a new car because you saved for it. Encourage them to participate when you sit down to pay bills or do your taxes and explain what you’re doing and why. Talk about your choices when shopping or how you comparison shop online.
Encourage them to take responsibility for their own money and purchases – Don’t just handle everything for your teen. If they have a cell phone, do they pay the bill or even know the monthly cost? Tap into their interests and tie it to money, whether it’s music and what’s being spent on downloads, sports and the cost of events or equipment, or the latest fashion fad and finding a bargain or shopping at a resale store to achieve the same look. Get them in the habit of saving; even $1 a week can start a positive pattern that will last a lifetime.
Be a role model – Take a good look at what you do and say when it comes to money. If it seems to flow freely without any questions or concerns, then your teen might make the assumption money will always be there. Think about the attitudes on money you convey – do you take it seriously and plan how you use it, or give it little thought and find yourself constantly scrambling to make ends meet?
Provide positive reinforcement – When you talk money, the topic shouldn’t be all doom and gloom despite the current economy. Make the connection between the right decision and a reward. Notice smart choices and a little spending restraint, and compliment your teen on their wise money moves not just their mistakes.
Educate yourself, so you can educate your family – Make sure you’re armed with some financial knowledge so you can pass along that knowledge to your children. Beyond such basics as budgeting and saving, know what a good credit score is and the impact it has on your ability to get a mortgage, car loan or credit card. Brush up on investment terms, savings and credit card rates, and find out more about college loans and financial aid forms.
For more information, visit www.icpas.org.