Get On A Common Page
Talk to your kids about what they’ve been learning about money, and from where—be it from the Web, their friends, in school or at home. (Don’t forget that your own financial behavior and choices send messages—intended or not.) Discuss the need to question both the expertise and bias of money sources. Is that influencer you so admire being paid?
“Objectivity is key,” Ziv says. “You want to ask, ‘Why is that person giving you advice? Are they coming at it from a selfless place?’”
A growing list of states require high school students to take a personal finance class to graduate, according to a new survey by the Council for Economic Education. In March, Florida became the most populous state to adopt the requirement. It’s a healthy trend. But don’t assume what kids learn in school is enough or always well-balanced. Example: Hundreds of thousands of high schoolers a year participate in stock picking games with play money, and some end up using high-risk techniques like margin borrowing and short selling to win the game. Gamification can be great at sparking interest, but has risk been fully explained?
To start the conversation, the federal Consumer Financial Protection Bureau has tips on what kids should know about money at different ages, as well as results of an eye-opening
quiz that shows how few 15-year-olds understand money basics or are prepared, for example, to protect themselves against financial scam phishing emails.
Discuss with your kids the need to question both the expertise and bias of money sources.
Help Kids Learn With Real Money
Giving your kids a reasonable allowance—as opposed to simply buying them things they want—is a good thing. “It creates agency and responsibility,” Ziv says. “It also gives them freedom to make mistakes at a lower-stakes level. We’re all going to make mistakes. It’s better to make them early on where there are parental guardrails.”
If your teen is earning money on their own, consider a “parental match”—similar to an employer match into a 401(k)—to encourage saving. The match can be into a regular savings or investing account, a 529 college savings account or a Roth Individual Retirement Account kids can open in their own names. You can help fund the Roth up to your child’s earned income. And don’t be put off by the name of the account; contributions to a Roth grow tax-free for retirement but can be withdrawn without penalty should your child need them for college, a house or any other goal along the way.
If your child gets a W2 tax form showing their earned income, that’s the time to discuss gross and take-home pay—and taxes. The good news is they may be due a tax refund if they were a regular employee and taxes were withheld. The bad news is if they earned more than $400 in gig income from odd jobs like babysitting, tutoring or lawn mowing, they are required to file a tax return and may owe Uncle Sam some money.
If your teen is earning money on their own, consider a “parental match” to encourage saving.