Nurturing Financial Literacy in Teens

Financial literacy is a vital life skill and starting early can empower teenagers to make informed financial decisions as they transition into adulthood. Teaching teens about money management, budgeting, and financial responsibility equips them with the tools they need to achieve financial independence and security. Saurav Roychoudhury, Ph.D., FRM, professor of Finance and Economics at Capital University, outlines the basics of financial literacy teenagers need to know for future financial success. 

Start Early

• Begin teaching financial concepts at an early age. Even young children can learn basic money concepts like saving, spending, and sharing.
• Use age-appropriate language and activities to engage children in learning about money.

Set a Good Example

• Children often learn by observing their parents or caregivers. Model responsible financial behavior by budgeting, saving, and making wise spending choices.
• Discuss financial decisions openly, so teens can understand the thought process behind them.

Basic Financial Concepts

• Introduce fundamental concepts like income, expenses, savings, and debt. Explain the importance of earning, saving, and spending wisely.
• Teach teens to differentiate between needs and wants, emphasizing the importance of prioritizing needs.

Budgeting

• Help teens create a simple budget. Encourage them to track their income (e.g., allowances, part-time jobs) and expenses.
• Discuss the importance of budgeting for both short-term and long-term financial goals.

Saving and Investing

• Explain the benefits of saving money. Encourage teens to save a portion of their income, even if it's a small amount.
• Introduce the concept of compound interest and long-term investing. Consider opening a savings or investment account with them.

Fostering financial literacy in teens is an investment in their future financial well-being. By providing them with the knowledge and skills needed to make sound financial choices, parents and educators can empower them to navigate the complex world of personal finance with confidence.

To learn more about Economics at Capital University, visit https://www.capital.edu/academics/majors-and-minors/economics/.