5 Real-World Money Lessons We Need to Teach Our Teens Now — Before They're On Their Own

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In my mid-twenties, I participated in a consumer research study on mobile payments. Around a dozen of us sat in a circle, clutching our Blackberries and early-gen iPhones, explaining to our host all the reasons we’d never feel comfortable paying for things on our phones. Fast forward 15 years, and I don’t think I’ve used a card to pay for anything all week.

Times change. So does our baseline for how we do things. Now, we expect mobile payments, prompt registrations, instant replies, and virtual ways to do business. Everything is fast, and the options are endless. But as Gen X and millennial parents prepare our kids for young adulthood in a world that appears more seamless than ever, we face the invisible challenge of providing them with a lesson they desperately need: context.

It’s an interesting paradox. Many more tweens and teens grow up today in environments that preach acceptance and hold space for individuality and emotional well-being — online and IRL. Yet, dissent is a threat. Conflict is bad. The illusion of safety and security comes from experiencing less friction, to the point where I fear many cannot tolerate any of it. As parents, we’d be kidding to think we don’t contribute to this (joys of mobile payments be damned). We want them to seamlessly receive, be accommodated, and enjoy the lesser risk of soft launches, so that they have it better than we did. But the risk of striving for seamless growth comes from the fact that life is not seamless, growth is not linear, and the internet too often smooths away the truth.

Money is the ultimate example of this. So much of what is considered basic financial knowledge isn’t basic for those who never receive it. Just more than 50 percent of participants in a recent SheKnows Teen Council survey on financial literacy reported learning financial concepts in school. And while this coursework is more prevalent than when we were growing up, we’re in a much, much more consequential battle for context than ever.

Teens and young adults are emotionally manipulated by what they consume online. Social media will curate narratives that normalize emotional spending, fast money, and the pursuit of luxury, neatly packaged under shallow themes at both ends of the spectrum: it’s either YOLO or hustle. Bed rot or no days off. For almost everyone, though, real life exists in the space between. You get to take days off because you’ve worked hard and saved up your PTO. You get that nice car because you’ve driven a beater for a decade first. I don’t believe this generation of teens and young adults feels more entitled than we did; they’ve just become unduly influenced by messages that aren’t real. On a scale of 1 to 10 (with 10 being the most confident), members of the Teen Council feel, on average, that they are a 3 out of 10 when it comes to financial responsibility and preparedness for their futures. (When asked what she’d need to know before feeling fully independent, 19-year-old Teen Council member Sophie said without hesitation, “How to manage money properly, how to save and invest … I don’t know anything about that.”

As parents, we can help them do better.

We have to define the baseline, and that is an incredibly hard thing to do when so many of us have lost the plot ourselves. There’s a strong current of educational, social, and extracurricular striving that can feel like a runaway train sometimes. We are such creatures of comparison. The guilt over not hiring a tutor so they would’ve made the honor roll or not starting them younger at soccer so they would’ve made the varsity team are no lesser examples of losing context over what really matters.

Lessons about money are not the same as screwing in a lightbulb. Lessons about money are lessons about life. Without them, our kids will have a much harder time overcoming their challenges or reaching their full potential in the real world — the world they actually live in. So, here are some money concepts you don’t want to leave up to the algorithm as you raise your wonderful, young humans. They deserve them, and frankly, so do you.

ROI on Higher Education (and the Weight of Student Loan Debt)

Higher education is indeed an investment in yourself — but how do you measure the return on that investment? How long will it take your child to make a $325,000 marketing degree worth it? If they aren’t crystal clear about what they want out of their degree (and at 18, not many are), they need to be critical of how much money they’re spending to receive it.

You’d think that because so many millennials are still saddled with student loan debt, our approach to higher education would be dramatically different for our kids. But that striving culture still exists. Many parents feel compelled to stretch themselves thin to help fund a child’s dream of attending the best school they gain acceptance to, and many children without the privilege of that help still do not understand the gravity of how student loan debt will weigh on their adult life.

To start, kids need to learn about interest and how it compounds on top of principal amounts borrowed. They need to learn the difference between federal subsidized, unsubsidized, and private loans. And most importantly, in my opinion, they need to understand just how opaque and impossible it is to deal with student loan servicers after they graduate. There is virtually no safety net in that system, and they will need to know how to advocate for themselves to get anything done. 

Cost of Living

Most young adults can easily find out how much rent would cost in a place they want to live, but rent is just the first expense. Utilities, internet, and transportation costs are musts. Then, there are the more invisible costs, like insurance (including maybe renter’s insurance), deductibles to even use that insurance, and memberships and subscriptions that feel critical to their lifestyles but really add up. This doesn’t include food and groceries, which will eat up more of their “adult” paychecks than they probably realize. I think the cost of food is one of the hardest costs for young people to grasp, because they’ve always been consumers but have likely only paid for discretionary meals and treats. They have never had to examine their consumption habits for affordability. That’s a major mindset shift. 

Credit and Consumer Debt

While credit itself is not a complex topic, teaching teens the correct way to use it might be. On one hand, you want to build credit as a young adult — your credit score can make or break your ability to rent an apartment, buy a car, or even start a business down the road. You build credit by using credit and then paying off your monthly amounts owed in a timely fashion. According to the SheKnows Teen Council, around 65 percent of survey respondents understand these basic concepts. However, “buy now, pay later” options are being marketed directly to young adults to finance everything from groceries to clothing. It’s a dangerous game to believe you can make minimum payments on a burrito, because financing small expenses is a slippery slope into losing control over your consumer debt and destroying your credit.

Taxes, Withholdings, and How Money Flows

Part-time employment during high school or college is the perfect time for teens and young adults to familiarize themselves with how paychecks work and how money flows in and out of their lives. As we all know, how much you make is not how much you take home. Teach them how to read their pay stub and learn the difference between gross and net pay. Have them see how much money is withheld for taxes and other types of deductions. They need to learn that the take-home amount is how much they are left to work with in their budgets, and only then can they begin to understand what they truly can and cannot afford.

Investing and Building Wealth

Investing early can give young adults an enormous head start, but our concept of what it means to invest is likely not the same as theirs. Young adults are being taught via social media and tech-forward investment platforms that investing is more like gambling — that it’s a risky, short-term game with winners and losers. For most, the gamification of investing works against building long-term wealth.

Teens should learn about compound interest, appreciating assets, employer matches, and setting automatic transfers into investment accounts. They should learn about having their money work for them through patience and discipline, not doing “the most” work while risking too much. 

None of this is easy, but like any other piece of raising kids into thriving young adults, you don’t need to accomplish it all in one day. If you strive to incorporate money lessons now, whatever age your kids are (because it’s never too early — or too late!), financial literacy will become a natural part of their lives — just like the seamless technology they’ll use for so much of it.

Heather Boneparth is the Director of Business and Legal Affairs for Bone Fide Wealth in New York City. Along with her husband, millennial money expert Douglas Boneparth, she co-founded The Joint Account, a weekly newsletter helping couples talk about money. Their book MONEY TOGETHER comes out in October.