Teaching kids about money early in life can make them more financially independent and can lead to higher savings, lower debt, and better credit scores as they become adults. According to the National Financial Educators Council, over half of teens ages 15 to 18 who recently took a financial literacy test failed it. The 30-question test designed for teens measures their ability to earn, save, and grow their money. Studies have shown that having knowledge about financial issues helps people make better decisions with their money.
7 Ideas to Teach Your Teen Financial Literacy
Here are some ways to help your child learn about the five key financial principles: earn, protect, spend, borrow, and save.
Model good financial behavior
Since kids often learn through observation, it's important for parents to model good financial habits. When shopping, show your child how to compare products and prices, including the differences between generic and name-brand items. Teach them how to factor in taxes and shipping costs when buying something.
Help them find ways to earn money
Encourage your child's entrepreneurial spirit and talk about ways they can earn money. Whether that's through chores, helping neighbors with tasks, babysitting, or getting a job, talk about how much money they can expect to earn and, if they have a job with a regular paycheck, how much they might pay in taxes and what that tax money is used for.
Open a bank account to save some of their earnings
Have your teen open a savings account (if they don't have one already) and a checking account where they can deposit paychecks and learn how to use a debit card responsibly by not spending more than they have in their account. WaFd Bank offers Free Checking* and minor savings accounts. You can open a savings account at WaFd Bank for just $10 with no monthly fees for all your kids that are under age 18.
Set a budget and track spending
Protecting your finances includes understanding where your money goes and making a plan for how to spend every dollar. Consider discussing wants versus needs and using an app that helps your child manage their money. WaFd Bank's mobile app has a tool that does this, so you can check your balance and track spending in different categories.
Apps and tools
Along with using your banking app, you and your teen will also have access to Greenlight if you have a checking account with WaFd Bank, which allows kids to safely learn how to manage their money. They will get a debit card that you can turn on or off and set spending limits. In the Greenlight app, you can send allowance or other money to your child's account, assign chores, and set spending and saving goals to help your child learn the value of money and how to save. Whatever your title (parent, aunt, uncle), you can set up the kids in your life for financial success with Greenlight!
Your teen likely knows the basics of using a credit card. But do they understand how interest works? Review the dos and don'ts of credit card use to help them avoid accumulating future credit card debt. In addition to discussing credit cards, make sure to cover the basics about how loans work (home loans, car loans, student loans, etc.) and the importance of having a good credit score.
Help your teen understand what stocks and bonds are and why they are important. Have them track the stock activity of some of their favorite places to shop. It may be hard for your teen to think this far ahead, but it is important that they also learn about saving for retirement.
WaFd Bank is Here to Help
No question is too small, and with WaFd Bank, you also have access to tools and services to help you manage your finances and get the most from your money, like the Greenlight** app. Greenlight helps to empower parents to raise financially smart kids. The app comes with Level Up, a fun game for kids to play so they can learn important money management skills. They can also manage their own money with the Greenlight debit card while staying safe and connected to family. Plus, parents can send funds, set flexible controls, and more. Visit us at your neighborhood branch, give us a call at 800-324-9375, or check out our kid and teen savings accounts.Open an Account
$10 initial deposit required to open a minor savings account.
*Free Checking requires a $25 initial deposit to open. Nonsufficient funds charge may apply.
**WaFd Bank customers are eligible for the Greenlight SELECT plan at no cost when they connect their WaFd Bank account as the Greenlight funding source for the entirety of the promotion. Upgrades will result in additional fees. Plans start at $4.99/mo. Upon termination of promotion, customers will be responsible for associated monthly fees. See terms for details. Offer ends 02/03/2025. Offer subject to change.