Teens and Financial Literacy:
How to Create
Meaningful Conversations

Financial literacy is important because it equips us with the knowledge and skills we need to effectively manage our money. By better understanding how to budget and save money, becoming financially literate can help us reach our monetary goals and increase the chances for a sound and secure financial future.

Barclays US Consumer Bank is participating in Financial Literacy Month this April by providing education that spans the basics of budgeting and saving, to managing debt. I started thinking about how much financial literacy has changed from when I was a kid to now as a professional and a parent.

My parents were immigrants and first generation Italian Americans who taught me and my siblings about money out of necessity. I earned money early in life and contributed to our household income through my weekly newspaper delivery route. I also learned the basics of balancing a checkbook and filling out a deposit slip. Back then, you only exchanged actual cash or checks for everything.

Today, children rarely see a check or cash. The current banking environment is primarily digital, and money is increasingly exchanged online or through mobile phones. Despite these differences in how money changes hands, it’s important to teach children how to manage money before giving them access to that digital money transfer app or adding them as an authorized user on a credit card.

My wife and I instilled basic money concepts into our four children early in their teenage years to educate and empower them to make decisions for their financial futures. Based on my personal experience, here are five useful tips to help teens prepare for today’s financial world:

1. Make sure they know what you know – Many parents and guardians make assumptions about young people’s financial savvy. Most children learn how to spend money through observation and are completely dependent on their parents’ income. A good initial conversation is to explain how to manage money. Explain the difference between checking and savings accounts; and a credit card and a debit card. Show them how to develop a budget. Help them plan for large purchases.
   
   
2. Make sure you know what they know – Today’s teens live in a digital world and ecommerce is at the center of it. Ask them where they are seeing opportunities to purchase, how they and their friends are managing and exchanging money and see if they have any questions about how it works. For example, today’s high school vending machines accept cash and cards, or kids can buy their favorite snack with the simple tap of their smart phone.
   
   
3. Consider an online banking relationship – As a teenager today, it’s difficult to go through daily life without access to virtual cash. Opening a joint checking or savings account can provide teens with a debit card, but also let them manage their own money. As a parent or guardian, you may want to make sure you monitor the account, but also provide some autonomy, so that they can make some of their own financial decisions. Take time each month to jointly review their account statement so they can see where their money has been spent.
   
   
4. Understand want from need – Once they understand the basics of handling money, it becomes more important to teach them how to spend and save it. The most common pitfall for anyone’s financial health is giving in to impulsive buying. This can occur due to a lack of understanding of how to make purchase decisions. Make sure your teens see the cause and effect of their actions. Give them an opportunity to prioritize their needs and teach them the consequences of irrational purchases in a safe environment. *
   
   
5. Saving money is important – Most kids want more control over making decisions as they get older. Approach your teenager with the concept that saving money will give them more control over how to spend it. Also impress upon them the importance of having a fund for fun things or emergencies. These things could include:
   • Buying a car
   • Gas for a car
   • Senior-year trips
   • Study-abroad opportunities
   • Unexpected car repairs
   • Broken cell phone
6. Get them to try new things – I encourage parents and children to stay curious about savings, credit, and the broader financial landscape. Seek to learn about new options out there and understand the terms and conditions of any financial instrument under consideration. For example, I set up each of my children with small Robinhood trading accounts so that they could dip their toe in the stock market.

The most important lesson I learned as a parent of teenagers was to make sure to sustain an ongoing conversation about financial literacy. The more they learned early in a controlled situation, the better experience they had when they were ready to manage their own budgets.

This information is for educational purposes only, not intended to be financial or legal advice. Always consult a qualified financial advisor before taking any action based on this information. The views and opinions expressed are those of the authors and do not necessarily reflect the official policy, position, or opinion of Barclays Bank Delaware.

Blog Author

Peter A. Gasparro
Chief Development Officer, Barclays US Consumer Bank

Peter A. Gasparro is the Chief Development Officer for Barclays US Consumer Bank where he oversees the bank’s partner-focused strategy as well as its business and corporate development efforts in the United States.

Peter is seasoned financial services executive with more than 25 years of experience in business and corporate development, product development, merchant services, and co-branded credit card management.

Peter is a proud alum of Seton Hall University where he earned a master’s degree in corporate communication and a bachelor’s degree in marketing.