5 money conversations to have with your pre-teen & teen

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Having difficult conversations with your teen can be daunting, but it doesn’t have to be. When you know your intentions and what you want to get out of the conversation, you can help ensure it will be productive. Or at least not a nightmare. 

Below you’ll find 5 of the most essential money conversations you should have with your teen or pre-teen before they’ve left the nest. 

How To Navigate Difficult Conversations 1. How money works

It may seem obvious to you how money works since you’ve been using it for years, but don’t underestimate the importance of talking it through with your teen or pre-teen. You may find that they don’t quite understand as much as you thought. 

When going through the basics, be sure to talk about some of the ways you can earn money and what kind of jobs are available at different ages. You’ll also want to talk about how taxes can affect a paycheck, and why you need to pay them. If they grasp these concepts quickly, you can move into more in-depth conversations about things like inflation, annuities, and saving for retirement. 

2. How to use money wisely

You may remember the freedom you felt from getting your first real paycheck at your first real job. It was liberating and so easy to go out and blow it all on fast food, video games, or shopping. Unfortunately, times haven’t changed that much and those same desires still live in teens today. For this reason, it’s important to talk to your pre-teen or teen about what to do with the money you earn. 

During this conversation, be sure to mention things like budgeting and saving. The sooner they pick up these good habits, the easier it will be when they start earning more money down the road. 

If they already understand these concepts, consider talking with them about investing. You can even set up monitored investment accounts through platforms like Fidelity and Stash

3. Financial goals 

If you don’t have goals, you won’t know where you’re headed. The same is true when it comes to making financial goals. When you have a clear vision of how you intend to use your money and what you want to achieve with it, you’re more likely to hit higher benchmarks. 

When talking with your pre-teen or teen about their financial goals, ask them some questions to help them get thinking. Here are a few you can start with: 

  • What do you want to do with your life in 5 or 10 years? 
    • How do you think money will help or hinder you? 
  • Do you want to go to college? 
    • If so, what kind of college do you want to go to? (community college, prestigious university, etc.)
  • What are some of your bucket list items?
    • How much will you have to make/save to achieve them? 

4. How to pay for college

Some parents may have a 529 account with money saved up for their child’s education. If this is you, explain to your pre-teen or teen how they can access the money when the time comes and how much they’ll have access to. 

If you don’t have any form of college savings, it’s not the end of the world. Your child will still be able to go to college, they’ll just have to work a little harder for it. Some parents would argue that it’s better for them to earn it this way. 

Whatever financial situation you find yourself in, talk with your child about different options for paying for higher education. This includes student loans, grants, scholarships, and personal savings. 

5. Credit & debt 

This is quite possibly one of the most important conversations you can have with your child about money. Credit can either be enabling or extremely detrimental in life. Talk with them about how credit works and how they can use it most effectively. 

Along the same vein, you’ll also want to talk to your pre-teen or teen about debt and how it works. Explain to them the negative impacts of consumer debt, but how some debt is inevitable, such as when you’re purchasing a home. 

Talking with your pre-teen or teen about money can be really rewarding. It can help them prepare for the future and even aid you in developing a deeper bond with them. While it may be difficult to do (and probably won’t make your teen’s day, per se) it’s so important to do. If you’re unsure how to get started, you can use the worksheet below to figure out just how much they understand about money already. 

Dropbox link to real-life finance worksheet: