Teaching Financial Literacy to Teens

A young boy in between his dad and grandfather holding a piggy bank.

Posted on September 3, 2019 Last Updated: May 18, 2021

The four fundamentals of financial literacy for teens

The new school year is around the corner and as your teens prepare for another year of learning, financial literacy is a topic that becomes more important every year. Making smart financial choices on a small scale in high school can have a big impact on their future and starting with the basic fundamentals now will equip them for bigger decisions in the future.

1. First checking account

One big step toward financial independence for your teen is setting up a student checking account. The account provides a good starting point for teens to discover how banking works and provides a tool for parents to show them how to manage their money. At many banks and credit unions, teens as young as 13 can open a student checking account with a parent signing as a joint account holder. The account gives the teen a place to deposit money earned from a part-time job, withdraw funds for a Friday night out, and the satisfaction of watching their money grow. The joint account creates accountability between you and your teen, which can be used to teach your teen how to manage income and expenses, how to make good spending choices, and how to avoid making money mistakes. It’s important that you monitor account activity to ensure that the money is being properly managed. Many student checking accounts come with the option to attach a savings account, which makes moving money to the savings account easy.

2. Saving for big purchases

Teaching teens to save money for bigger or important purchases is one of life’s most valuable lessons. First, talk about the difference between the two accounts – checking is for spending for everyday items and savings is for putting money away for an emergency, a rainy day or a planned big purchase. Second, show your teen how to move money from their checking account to their savings account. And lastly, encourage your teen to set a savings goal and make regular savings account deposits to achieve their goal. Staying on track with a savings goal they establish will encourage them to save money and avoid impulse purchase.

3. Living within your means

There are two variables in the financial management equation – spending and income. Spending more than your teen makes is not a good habit at this stage in life and certainly not healthy as they launch into adulthood. This is a tough concept for many young teens to grasp, because, in most cases they have little in the way of “means” and, apart from a trip to the store, most teens don’t have predictable expenses. The unpredictable nature of their purchases is what makes this topic so important. Teaching them to spend less than they make, while achieving their savings goals, will set them up well for the future when the expenses get bigger and more routine. If you observe your teen’s spending habits are trending toward the RED, sit down with them and review their purchase history, show the spending trends, and discuss the impact of their spending habits on their savings goals and overall account balances.

4. Protecting their identity

Teens and young adults are at high risk for identity theft simply by virtue of their inexperience. Start by explaining what identity theft is and the short-term and long-term problems it can create. Cover the basics of protecting themselves from identity theft —monitoring checking account transactions regularly, using only trusted and secure websites to make purchases, logging into secure Wi-Fi networks when making online purchases or viewing bank account information, and always protecting account information and social security numbers. Most banks and credit unions offer fraud alerts that monitor account transactions for suspicious activity, which is something you and your teen should review.

These four areas of financial literacy will give your teen the financial foundation they need as they take the next steps in life. As a parent, you want the best for your teen and giving them the tools to learn and grow in their financial literacy can help them in every stage of their life.

Want more assistance with financial literacy for high school kids? Stop by KEMBA Financial Credit Union today or call a KEMBA Member Service Representative today at 800.282.6420, option 4. For members, our advice is always free.


 Become a member

Come see why we're a better way to bank.

Open an account