If you have a teen girl in your life, you're already all too familiar with how much she thinks about the future. She’s probably spending a lot of time looking at colleges and career choices. Has she given any thought to her financial future? If that seems like too much responsibility too fast, it shouldn’t. Kids should start learning about smart money management in elementary school, and it’s not as complicated as it sounds. Running a lemonade stand? Sorting Monopoly money? It all counts. However, the high school years are an especially important time to review money management skills with your teen, because she’s close to the age when she can open her own bank account or apply for her first credit card.
Women lag behind men in financial literacy. If your teen girl's age is not enough of a reason for her to learn more about money, consider the unsettling financial literacy statistics for women. Regardless of race and socioeconomic status, women still lag behind men in their knowledge of personal finance and make less money than they do. The good news? They also make better financial choices when they learn money management skills from their families. That’s where you come in. And even if your teen doesn't dream of trading on Wall Street, she’s probably more interested in money than you might think. The recession has caused many more teens (both boys and girls) to become more interested in smart money management strategies.
She knows more than you think...but not enough. Charles Schwab conducts an annual Teens and Money Survey. In 2011, they polled more than 1,000 teens 16 to 18 years old. The results surprised many people, especially when they compared them to the 2007 survey. Many more teens reported interest in saving money and learning about it. Seventy-three percent said they learned about the importance of emergency savings from the recession, and 77 percent now consider themselves "big savers" instead of "big spenders." However, the surveys also show notable declines in financial literacy, especially for 18-year-olds. In 2011, only 32 percent said they knew how credit card interest rates and fees work, down from 43 percent, and 39 percent knew how to balance a checkbook or check the accuracy of a bank statement, down from 64 percent.
Carrie Schwab-Pomerantz, senior vice president of Schwab Community Services, believes that the recession has made more young people realize they don't know as much about finance as they thought. If you’re wondering why they aren’t teaching this stuff in school, it’s time to check and see if your teen’s high school even offers an economics class. According to the National Council for Economic Education, as of 2007, only 17 states require high school students to take an economics class to graduate, and only 7 require a class in personal finance.
Get her a bank account (if you haven’t already). Approximately half of teens already have a bank account or student credit card. With proper guidance, a debit card is an excellent way for your teen girl to practice managing her finances. If she doesn’t have a bank account, get her one. Many banks, including Wells Fargo and Union Bank, offer checking accounts for teens 13 and older; you’ll just have to co-sign. Check with your local bank or credit union to see if they offer similar programs. Try to choose a “teen account” to get the flexibility your teen is likely to need. These are less likely to require a minimum balance of $1,500 (thank goodness), and may even automatically convert to a regular savings account when your teen turns 18. Use the same discretion as you would when opening a bank account for yourself. You both will learn more by doing research together.
Encourage her to get involved. Your teen girl will learn so much more about money management by working on projects of her own. If she’s so inclined, encourage her to get involved in a larger organization, whether it’s through school, church, a local club, or a national club. Below are two of many national organizations that promote financial literacy for girls.
Girls Inc. Economic Literacy Program. Girls Inc. provides girl-centered programing for girls ages 6 to 18, and one of their core components is their economic literacy program. The Equal Earners, Savvy Spenders program is for girls ages 12 to 14, and the Futures and Options program is for girls ages 15 to 18.
Girls Scouts USA. Those yummy Girl Scout cookies are more than just a fundraising tool; they’re also a key part of the Girl Scout financial literacy curriculum. During cookie season, the girls are actively involved in all the business aspects of the cookie business, including marketing strategies, budgeting, and bookkeeping.
Tim Chen is the CEO of NerdWallet, a credit card website dedicated to helping students and their parents find the best credit card rewards.to establish solid spending habits.