Teaching teenagers about money is one of the most important things a parent can do to prepare them for their future. Barbara McRae, MCC, Bestselling author of Coach Your Teen To Success says, “As a nationally known parent-teen expert, I believe financial literacy is one of the primary responsibilities of a parent to offer their children in preparation for adulthood.”
It is critical that we, as parents and educators confront our own limitations AND expertise in this area if we are to assume this responsibility effectively.
David and Tom Gardner, in The Motley Fool: Investment Guide for Teens say,“Few people ever receive any kind of formal education about money. Most adults are playing it by ear…most of them are very insecure about their money. …And quietly, if not openly, many people feel ill equipped to face the challenge of managing money throughout their lives.”
As a financial literacy educator, I urge you to consider that financial literacy is NOT really about delivering information. That is to say, information about money is critical, but not foundational. Money mastery comes from a set of habits and attitudes, and it’s the job of educators to identify these thoughts and behaviors and then teach them to the teens in our lives.
Here are three foundational lessons that you can do with your teen. These lessons are journal writing lessons that encourage introspection and clarity on the subject of money.
Journal 1: Your Really Good Reason
Consider this quotation:
"Prosperity is a way of living and thinking, and not just money or things. Poverty is a way of living and thinking, and not just a lack of money or things."
Eric Butterworth
Money is a tool for making many of our dreams come true. Without much money, we have to limit our dreams.
What kind of life do you want to give yourself? Write a list of things you want to do and have over the course of your life.
What do you want to be able to provide for the people you love? For your children? For your parents?
What kind of difference do you want to make for the world? What kinds of footprints do you want to leave?
Journal 2: Life without Money MasteryThink about all you have learned about being masterful with money. Imagine living your whole life without
*Earned, passive, and portfolio income
*Great money habits and attitudes
*Knowledge about how money works
*Great habits already developed before you become an adult
*A clear reason for being masterful with money
*An early start building your Future Financial Freedom fund
What will your life be like without these?
Journal 3: Making Your Money Grow—How Compound Interest Works
Consider this Money Tip: Don’t judge the amount, judge the habit! People who have great money habits have plenty of money. People who wait until they think they have a lot of money to develop these habits, don’t.
Let’s say you earn $1000 this year and invest it. Look what happens at different interest rates. Fill in your age next to Year 0. Then add 10 years and fill in the next box for your age, again and again until you complete the chart.
|
Year |
Your Age |
5% |
11% |
13% |
|
0 |
(today) |
xx |
xx |
xx |
|
10 |
|
$1,629 |
$2,839 |
$3,395 |
|
20 |
|
$2,653 |
$8,062 |
$11,523 |
|
30 |
|
$4,322 |
$22,892 |
$39,116 |
|
40 |
|
$7,040 |
$65,001 |
$132,782 |
|
50 |
|
$11,467 |
$184,565 |
$450,736 |
Fill in your current age next to the number 0 in the chart. Then add 10 to it for each of the boxes below it.
This is how $1000 grows with compound interest. Right now, it’s hard to find a place to save your money where it will get even 5% interest. But, if you put it somewhere NOW where it’s growing even a little bit, you can move it when the economy improves and interest rates are higher. In the meantime, you are growing your Future Financial Freedom account AND practicing a habit that will make you financially secure for your whole life.
The reason compound interest works is that, as you get interest on your investment, the value of the account grows. As the money in the account grows with the interest, the amount of interest you get continually increases. So, while you are out living your life, your money is growing. This money that you earn through compound interest is called Portfolio Income. It’s a great way to make money!!
Write down some of your thoughts about compound interest.Jill Suskind, from Andover, MA, has been a public school teacher for the past 23 years. She is currently on a leave of absence, thrilled to be working full time on her mission: to prepare this generation of teens to meet the financial realities of adulthood with confidence and competence. She is committed, this year, to be a valued resource and partner for the homeschooling community. Jill is most eager to hear readers’ thoughts, questions, and feedback so that she may serve this powerful and growing community.
Jill Suskind, from Andover, MA, has been a public school teacher for the past 23 years. She is currently on a leave of absence, thrilled to be working full time on her mission: to prepare this generation of teens to meet the financial realities of adulthood with confidence and competence. She is committed, this year, to be a valued resource and partner for the homeschooling community. Jill is most eager to hear readers’ thoughts, questions, and feedback so that she may serve this powerful and growing community.
Jill Suskind
President, WealthQuest for Teens, Ltd.
http://www.wealthquestforteens.com
email: jill@wealthquestforteens.com
Serving a world-wide community of teens who build and celebrate wealth responsibly.
