Strong financial literacy and money management skills are beneficial to all of us but especially our young people. The earlier they learn how to budget, save, invest, and make financial decisions that reflect their goals and needs, the more likely it is they will take those skills with them into adulthood.
Let’s talk about the benefits of a teen checking account and how practicing money management teaches them essential financial literacy skills they can take with them into the future. Understand how teens learn, when to start teaching financial literacy skills, how to foster a learning environment at home, and where they can go for additional money management resources.
How Teens Learn
Oftentimes, teenagers learn by doing. Their brains are still developing, and they’re at a stage where they learn best through hands-on experience. In addition to this, when they can see and experience the rewards of new behaviors or skills, they’re more likely to retain this information and develop it into a habit. For this reason, money management and financial literacy lessons are most beneficial when teens are rewarded for making wise spending and saving decisions.
One example of how to nurture this is helping teens set savings goals. If they’re interested in a new piece of tech or a new pair of sneakers, encourage them to save for it. When they achieve their savings goal, celebrate it with them and congratulate them on making wise spending choices. Start by setting small, achievable goals first. Build up to larger goals as they adapt and adjust to these new habits.
When To Teach Financial Literacy
Learning financial literacy starts at home. Look for ways to help the young person in your life learn money management by doing money management tasks. One way to teach these skills is by sharing information with your teen about how your household budget works. Walk them through a normal pay period or billing cycle. Explain how you budget for your bills, groceries, entertainment, and savings.
Let them sit down with you and observe you balancing your household budget. Ask for their input or thoughts on your budget. Encourage them to make suggestions or ask questions. You might even invite them to participate.
For example, tell your teen how much is in your budget for groceries for the next week and then guide them in making a grocery list. Encourage them to consider meal planning, couponing, and shopping for discounts. By involving them in these processes as teenagers at home, they’re more likely to feel comfortable handling these tasks when they are no longer living at home.
As children enter their teen years, they’re more likely to want financial independence from their parents. This is an important step toward adulthood and should be welcomed. There is never a wrong time to teach our children financial literacy, and as mentioned above, teens learn best by doing and by experiencing rewards. Encourage your teens to practice their money management skills and guide them in making healthy financial decisions. These lessons will lay a strong financial foundation they can build upon with their own teen checking account.
Where Else Can Teens Can Learn About Finances?
While hands-on experience will always be the best way for teens to develop financial literacy, financial education programs can take their knowledge further. Your local credit union is a great resource for this type of material. Credit unions like Capital CU have a long history of providing guidance and financial literacy to families.
CCU’s Financial Education Program offers a large library full of money management lessons that feature a variety of subjects, such as financing higher education, investing in the future, and more. Sit down with your teens and explore the chapters or build a custom playlist for your teens to read through independently.
Why Money Management Skills Are Important
One of the top priorities for parents is making sure their children have the life skills necessary to succeed in adulthood. Understanding how to manage their money is one of those life skills. Teaching teenagers how to create and maintain a budget, monitor their accounts, pay bills, save for larger purchases, and know when to cut back will help them achieve financial stability and security later in life.
With a teen checking account, such as the Greenlight debit card program offered through Capital Credit Union, teenagers get real-world practice making spending and savings choices. Teens with their own checking accounts and debit cards have the opportunity to learn by doing while being safely guided by parents or guardians. It’s an excellent way to help teens stretch their financial legs while minimizing the risks.
How To Find the Right Checking Account for Your Teen
When picking an account for your teen, look for options like flexible controls that allow you to set spending limits, access to their spending history to help your teen budget and adjust, and instant transfers to ensure your teen doesn’t run low on funds. A debit card option will give them full access to their funds for online and in-person purchases, while a mobile wallet option can allow your teen to link their account to Apple and Google Play accounts.
The Greenlight app and debit card, available to CCU members, makes learning financial literacy fun and easy. In addition to receiving a free debit card and access to digital banking features, parental controls, games, and lists are built into the app. So teenagers have the freedom to learn by doing while also being protected and monitored as they learn.
When your family is ready for a teen checking account, you can also start your complimentary Greenlight subscription online and help your teens build their first budgets and set their first savings goals. Teenagers learn through hands-on experience, practice, and fulfilling rewards. Give your teens the money management skills they’ll need on their way toward a strong financial future.