Financial literacy is a crucial concept for kids to learn—especially teens. Once our children enter the “big kid” years, they are long past saving change in their piggy banks and need to actually start thinking about how money works in the real world. The following is a Q&A from Victor Wang, CEO of Stockpile, an investing platform empowering the next generation of investors through hands-on learning.
1. If parents have entered the tween/teen years, and haven’t spent a lot of time discussing money management, budgeting, etc., where should they start?
Parenting means having a ton of conversations with your kids: how to stay safe, how to manage emotions… the list goes on. But one conversation you don’t want to skip? Talking to your kids about money. And it’s never too late. More important than the specific lessons is simply starting the conversation. Talking about money with your tween/teen can feel really scary (which is probably why less than ⅓ of parents do it).
While they probably already know the basics of what money is and how it works, you can start with topics like paying bills, investing for future goals, what taxes are and how they work, and the difference between debit cards and credit cards. As they learn more, you can even introduce more advanced concepts, like risk tolerance and diversification when it comes to investing.
Give your teens the freedom to make mistakes and learn from them. The more they learn now, the more prepared they’ll be for their financial future!
2. What are some tips on raising financially confident teens?
If you’re looking for a place to get started, here are some essential lessons to teach your kids about money:
- How much things cost
- Most kids struggle to understand exactly how much it costs to buy things (that’s probably why they ask for everything under the sun when you’re at the store). Once they’ve learned to count money, you can show them how much things cost, like grocery items or the toy they want.
- The difference between “needs” and “wants”
- Understanding what’s essential (needs) and what’s not (wants) can help kids learn to manage their money responsibly.
- Needs are things that are essential for us to live, like food, a place to call home, clothing, and transportation. Utilities like heat for an apartment or house in the middle of winter is another example of a “need.” So is gas so they can drive their car to school.
- Wants are the things that help us enjoy our lives, but aren’t essential. A brand new phone, tickets to a Sabrina Carpenter concert, a snowboarding trip, or a Netflix subscription are all examples of “wants.”
- How to save for something they want
- Help your kids understand that while they can’t have everything they want all at once, they can set savings goals and save for the things they’re most excited about.
- When they get excited about a new item or experience, encourage them to save for it. You can help them figure out the cost of what they want and break down how much they’d have to save per week or month to make it happen.
You may also like to read: Teens and Summer Jobs—What Your Kids Need to Know
3. My teen doesn’t have a lot of interest in learning about investing. How can I underscore how important it is?
Teach them what compound interest is and how it works. It can feel a little bit like money magic! The earlier kids make investing a habit, the more their money has a chance to grow. Explain what “interest” is and then take it one step further to talk about compound interest. Compound interest happens when the interest you’ve earned starts to earn interest of its own, helping your money grow faster and faster. An easy way to remember this is to think of it as “interest on interest.”
The best part of investing is that you don’t need a lot to get started. Kids can invest in the stocks they want for as little as $5. You don’t need $1000 to buy Netflix and you don’t need $500 to buy Meta. You can buy $5 worth. Families and friends can also help kids get started by getting them gift cards redeemable for stock. They can give them $50 of stock instead of $50 of toys that they are unlikely to remember or play with for longer than 10 minutes.
4. What are some ways parents can model fiscal responsibility for their teens/tweens?
While you don’t have to pull out your tax documents and show your kids exactly how much you make, it can be helpful to bring them into the money-related events that happen in your life. For example, you could show and explain your monthly utility bill, take them along the next time you buy a car, or walk them through how you navigated the financial side of an unexpected event, like a house repair or car troubles.
Point out price differences at the grocery store, explain why you decided to buy one thing over the other, and demonstrate wants vs. needs in person (groceries for the week vs. sweet treats, a winter coat vs. cool sneakers).
Money can be a really emotional thing, so keep it positive. Be thoughtful about how you introduce certain topics. For example, when teaching kids budgeting, frame it as something that helps people create a plan for their money, so they can reach their goals, instead of something restrictive. That way, kids learn it isn’t about keeping yourself from spending at all costs, but prioritizing your money for different purposes and spending responsibly.
Rather than responding with “we can’t afford that” when they ask for something at the store, help them understand the true cost and encourage them to start saving for it. You can even break down how much they’d have to save each week or month to buy it in a certain time frame. This positive approach helps kids feel like anything is possible, but understand that getting the things they want might take time.
You may also like to read: You Need to Talk about Online Gambling with Your Teens Right Now
5. Should my teen have a credit card?
I think we all know that the safest way to use a credit card is to not use one. But when someone does use one, it’s important to make sure they know to only spend what they can afford to pay off. Teens, of course, are no exception. That’s the beauty of debit cards… they help teens build the right habits early.
We all know that when teens hit college campuses, there will be a row of tables trying to get them to sign up for a credit card, even multiple cards. So it’s important for them to already have the discipline about whether they even need a credit card. And if they get one, how to be responsible with it. That comes from building good habits around card usage like spending within your means and not building debt at all… and that can start by using a debit card first.
Financial literacy for teens means looking at their entire financial picture (not just their spending) and avoiding debt. It’s important that kids know the more they spend, the less they have to save or invest. And they need to remember this mantra: Save first. Invest second. Spend last.
6. How can we encourage our teens to save money either from their allowance or a part-time job?
The best thing is for teens not to PRACTICE budgeting, but to DO budgeting. We have seen time and time again that simply teaching the concepts and lessons of money are completely inadequate. It’s just like sports… you can’t get good at basketball by just reading about basketball. You have to play. Building experience and confidence with their own money is the most important part of the learning process. Create a budget with them together, and learn to adapt and adjust along the way.
When it comes to giving them an allowance, this doesn’t need to be a lot of money either! Even $10 a week can help kids build good habits.
Looking for an additional resource to teach your teen life skills like financial literacy? We recommend Life Skills for Teens: How to Cook, Clean, Manage Money, Fix Your Car, Perform First Aid, and Just About Everything in Between by Karen Harris.
Parenting teens and tweens is a tough job, but you’re not alone. These posts might help:
Three Simple Tasks You Should Transition to Your Teens Today
These Essential Soft Skills Can Help Your Teen Succeed
100+ Awesome Gift Ideas For Teen Boys for 2025
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