Financial literacy is the facility to apply skills and knowledge to make wise financial decisions.  Gaining these skills and knowledge is an ongoing process that begins in childhood.

Most schools don’t offer financial literacy requirements in their curricula.  It is on the parents and the children themselves to gain the necessary knowledge and skills.  Unfortunately, many parents are uncomfortable discussing money.  They’re concerned about saying something wrong and not even sure where to start.

These suggestions will make it easier to educate your teenager about money issues:

  1. A game can be fun and educational.  There are many free games online that teach financial skills.  One good example is  It’s a great way to get your budding tycoon off to a good start.

  2. Consider part-time employment for your child.  It’s beneficial for a teenager to have a job during the summer.  Some can handle a part-time job, particularly on the weekends while school is in session.  Schoolwork should not suffer due to employment.

    • Your child begins to understand that sacrifices have to be made to earn money, even if the only sacrifice might be time.
    • Taxes become a lot more real and understandable.
    • Your teen also has to learn how to responsibly handle her money.
  1. Let him do a budgeting project.  If you’re planning a vacation or looking for a cell phone plan, it might be a great opportunity to let your teenager do some research and present the findings to you.  He’ll learn a lot, and you’ll get a break!

    • Give your child some parameters and provide helpful feedback on his work.
  1. Buying a car is commonly the first major financial event in a teen’s life.  With a co-signer, your child should be able to get her first loan. This is a great opportunity to create a positive credit history.

    • She will also quickly learn about the additional expenses that come with certain purchases. There will be gas, insurance, maintenance, repairs, registration, and so on. It’s all these related expenses that must be considered when deciding if a major purchase makes financial sense.
    • Be hesitant to bail your child out if she struggles one month to meet her financial obligations. Help her work through the challenge.
  1. Credit and debt management are also important.  Most adults wish they had done a much better job avoiding debt issues earlier in life.  Credit is about being able to borrow money.  Debt management is about being able make good decisions about how much to borrow and paying it back reliably.

    • Teach your teen about credit scores and what determines a credit score.  Explain how his credit score affects his ability to borrow money to buy a car or a house.  It also affects his insurance rates and interest rates on loans.

Adding your child as an authorized user to your credit card will help her build credit.  Pre-paid credit cards are another option.  Your teen might be able to get her own credit card when she's 18.

Teaching your teens to make wise money and financial decisions has a huge effect on their happiness as adults.  Take the time to get your teenagers off on the right foot.  Start teaching them about personal finances today.