I’m so excited to welcome Brian from Luke 1428 to The Heavy Purse today. Brian is a former high school financial literacy teacher and will be sharing some of the insights he gained about teenagers and money. Yes, Mom and Dad — your teenagers do want to learn about money! If you’re interested in being featured at The Heavy Purse, please see my guest posting policy.
I’ve had the privilege for the past 17 years to be engaged in a challenging and never-dull career, the educational instruction of teenagers. Until giving up my high school teaching position recently to become a stay at home dad, part of my instructional responsibility was teaching Basic Economics and Personal Finance classes. I used some really good material over the years, including the high school curriculum published by Dave Ramsey’s team.
My economics classes were enjoyable enough. The students were able to understand the historical trends of economics, the basic concepts of supply and demand, and how governments can promote or hinder economic growth. I would say as a whole, that class was met with only average, C+ levels of enthusiasm.
But mention the words “Personal Finance” and the kid’s eyes would light up. No one was more surprised than I during the first personal finance class I ever taught at the excitement level of the students. They LOVE to learn about money and personal finance. There is something about the topic that sets them on the front edge of their seats.
This is important to note because, as Shannon points out here every week, parents don’t talk to their kid’s about money. Whether it’s lack of knowledge, embarrassment of their own failures or simply not feeling it’s important, parents shy away from this responsibility. The feedback I received from my students supports her conclusion, as they would often say money was a taboo subject at home.
I’m here to say to parents everywhere your child wants to hear this stuff. They are longing to know how to be financially savvy. But what do they want to learn about most?
What I found over the years is that within the realm of personal finance there are three main topics that teens are more naturally drawn to. These typically generated so much excitement in the classroom that I’d be fighting to get the students out the door at the end of class. As a parent, I’d start focusing on these three issues before anything else.
By their junior year in high school, many teens have worked for an employer, even if it’s just been a summer job. They’ve seen how work turns into a consistent paycheck. More importantly, they’ve witnessed how consistent earnings opens up potential avenues for spending their money on things they like.
They have goals for their hard earned dollars just like adults. Buying clothes, going to prom and purchasing their first car are all on their immediate radar screen. The problem is (just like many adults) they haven’t quite developed the discipline to set limits and spend properly. This brings frustration because they see it is keeping them from saving for those big goals that require more money.
So we’d talk about becoming an informed consumer, one that recognizes the psychological traps retailers set that get us sucked in to spend. I’d show them how to prepare a budget, one that begins with saving for oneself first while still meeting the rest of their needs. Wrapped up into those discussions would be the topic of debt and how that can negatively impact their financial future.
Kids are really concerned about the costs of college and how they are going to pay for it. The body language given to me when I posed the question, “How are you going to pay for college?” demonstrated this. Kids would shift in their seats, get a worried look in their eyes until finally hanging their head and saying “I don’t know…I guess my parents will help or I’ll get a scholarship.”
It’s obvious from what they said to me time and time again that the students:
A) had parents who didn’t plan ahead enough in saving for college expenses.
B) wished their parents talked with them more about how to pay for school.
C) were frustrated their parents had said “You are on your own for college.”
D) didn’t know what it takes to get scholarships.
F) hadn’t thought about working their way through school.
G) were unaware of all the additional costs associated with college beyond tuition, room and board.
H) hadn’t projected how certain majors would translate into future career earnings.
Bottom line is that parents are really dropping the ball with this topic and it is generating palpable fear in the lives of their kids.
Let’s face it. Every teenagers dream is “to make it.” Translation…to get rich.
That may seem selfish and shallow but it’s what the teens live with every day. Their world focuses so much on music, movies stars and professional athletes that it’s easy for them to get wrapped up in the lifestyles of the rich and famous. They see wealth “out there” everyday, think it’s the path to happiness and want a piece of that action.
So their minds perk when you start talking about building wealth or “becoming a millionaire.” They want to know how that is done for the average person. What a great time to introduce them to the world of investing.
You would think investing a difficult subject for them to grasp. It’s really not. They can easily understand there are companies that a person can buy a share of stock in – a piece of the pie as I’d call it – and that an investor can become wealthy as that piece of the pie grows in value.
The biggest thing I tried to impress on my students was the value of time. The younger they start the better chance they have of growing long-term wealth. They were always astonished when I showed them some basic calculations about how much $2,000 invested every year from ages 18-65 would grow given a simple 8% annual return.
Granted, given their “I want it all now” view of life, it irritated them it takes a long time to grow great levels of wealth. However, I know many were convinced that delayed gratification is worth it. That concept alone is worth having the investing discussion.
There were many other concepts we talked about in my personal finance classes. While receptive and able to understand them, I found students had a greater disconnect with topics such as insurance, taxes, buying real estate, and retirement. Those didn’t seem to resonate, partly because they weren’t front and center on the student’s minds. Kids are interested in the immediate and budgets, college and building wealth hit them right in the sweet spot.
So parents, don’t be afraid to step up to the plate and discuss these big three issues with your teenagers. They are dying to hear from you.
Do your kids show an interest in money related subjects? How have you found it challenging to talk to them? How is your family planning on paying for college? Does your child have an investment account already set up? Were you worried about building wealth as a teenager or were there other things that captured your focus?
About the author: Brian Fourman is a former private school teacher now turned stay at home dad and personal finance blogger. His hobbies include rental real estate, running, cooking and sports. In his down time, he loves hanging out with his four kids and hearing his wife talk about all the cool things CPAs do at work. You can check him out providing encouragement and inspiration on his blog at Luke1428.com or by connecting with him on Facebook, Google+ and Twitter.
Photo courtesy of Money Girl via flickr.
SHANNON RYAN, CFP®
Your article will really help me to focus my teens on what's important (and interesting) to them. Thanks!
We did that because we were raised to think that speaking about money was just rude and that the "right" way to raise kids was to be fiscally responsible enough to fund their college (but make them work for anything other than tuition, room and board). Now that I listen to your blog, I wish we had been more forth-coming with them when they were teens. It probably would have been more beneficial to them had we done that. Thanks for the insight. We can at least pass that on to our kids who can then pass it on to theirs.
Very nicely done!