- More than 30% of teens don’t believe they’ll be financially independent by age 30.
- In spite of a strong economy, many teens lack confidence when it comes to achieving financial goals.
- Parents can help their children by setting a good example, teaching them how to manage money and setting financial boundaries.
Roughly one-third of teenagers ages 13 to 18 don’t believe they will be able to hit major financial milestones by age 30, according to a national survey by Junior Achievement and Citizens Bank. The survey revealed a few more compelling stats about teens and money milestones at age 30:
- More than 30% don’t believe they’ll be financially independent of their parents.
- Only 44% think they’ll have started saving money for retirement.
- Less than half of those surveyed believe they will have paid off their student loans.
In some ways, these results are unsurprising. Outstanding student loan debt stands at over $1.5 trillion as of April 2019, according to the Federal Reserve. Knowing that could impact a teenager’s ability to feel confident about planning for their financial future.
A separate survey by Piper Jaffray found that teenagers spend about $2,600 a year on clothing and food, indicating your kid might not have the financial literacy skills they need to begin saving.
3 Ways to Teach Kids Financial Literacy
April is recognized as Financial Literacy Month. For parents of teens who might share the same feelings as those surveyed about financial milestones, this month can be an especially opportune time to talk to their kids about money.
With financial literacy at top of mind these next few weeks, here are three ways parents can help their teens become financially independent:
1. Model Good Financial Behavior
More than 60% of teens will turn to their parents for financial advice, according to the Junior Achievement and Citizens Bank survey. So the best way parents can teach good financial habits is by modeling those practices in their own lives.
Parents can do this by paying their bills on time, maintaining a good credit score, living below their means and saving money toward retirement.
2. Show Kids How to Budget and Save
Once kids understand the different ways they can earn money, they need to learn how to manage it. This should start as early as possible; a 2018 Purdue study found that by age 7, most kids’ financial habits are set.
To give them a full picture of what budgeting looks like, parents should consider including their children in the family’s budgeting sessions. This is a good way to explain how to track spending, pay bills and automate savings.
Learn From This Parent: Why I Pay My Kids an Allowance — and You Should Too
3. Set Financial Boundaries
Experience is the best teacher. At some point, kids will have to learn how to support themselves. In the meantime, parents can help by setting strong financial boundaries with their kids.
Once children become adults, parents aren’t obligated to support them financially. Although financial support is a personal decision, setting boundaries can be one of the best motivators to help kids move on and learn financial independence.
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