How to Help Teens Gain Financial Literacy and Independence
By: Aquinnah Bree
Tags: Teen Banking, Financial Literacy, Financial Planning, Finance, Financial Freedom

Money. For some, that single word elicits a feeling of anxiety, and for others, sheer panic. And is it any wonder? In just a few weeks, teenagers across the country will graduate from high school. Most will have three or four years of advanced math under their belts. Few, however, will have a true understanding of money and how it works.

Stay in school, find a job, save every penny you can and retire with a pension. These are the key principles we, as a society, have been taught and passed down for decades. But judging from the $1.5 trillion student loan crisis, and the baby boomer retirement crisis, we may need to revisit financial literacy with our kids and teens to better prepare them for the future. How can we set them up for financial independence before $30K in student loan debt puts a damper on their lives for years, if not decades?

Start Early

Allow us to introduce John and Beth.

John just turned eight years old, and his grandparents kindly gave him $50 for his birthday. Within minutes of receiving his gift, John is scrolling through the Lego website until he discovers the biggest, most expensive set he can afford. His mom helps him place the order, and he begins counting down the days until it arrives in the mail.

When John’s new toy is delivered a week later, he’s ecstatic… and curious. Inside the shipping box lies a new Lego catalog, and like any collector worth his salt, John immediately grabs a marker and starts circling every picture that catches his eye. Unfortunately, John has no money left and sadly realizes he’ll have to wait for his next windfall.

Beth, too, just turned eight years old and was gifted $50 in birthday money. Unlike John, she makes a habit of putting at least half of her cash gifts in a savings account, something she’s been practicing for as long as she can remember. She plans to spend some of her birthday money on a new dress for her doll, and the rest will go in her savings account, which will afford her a new bike by summer. Even though Beth is only eight, she plans to make and sell bracelets around her neighborhood. Her new bike will come in handy for her sales route.

Fast forward 16 years.

John graduates from college and gets an entry-level sales job. The used car he’s been driving since his junior year of high school is croaking, and he realizes he needs a new vehicle. Regrettably, John has nearly $30K in student loans following him around, and a shiny new car isn’t going to fix that. Where’s the nearest bus stop?

Meanwhile, Beth skipped college and opted for an apprenticeship instead. She, too, is working an entry-level sales job. But, unlike John, Beth is debt free and has been socking away savings. When it’s time to buy a new vehicle, she’ll opt for something dependable — and pay cash for it.

Beth’s early lessons about how to save and spend responsibly paid off.

Healthy Habits

Teaching our kids and teens how to be financially responsible seems intuitive, even non-negotiable. But how exactly did Beth grow from training wheels to a driver’s license and beyond without any debt, while John, who was taught all of the same key principles, ended up buried in loans?

First and foremost, Beth was taught to find joy in practicality. While her friends indulged in a world of instant gratification, Beth set short- and long-term goals and followed through with them. It wasn’t always easy — and she wasn’t always patient — but because her parents always talked to her about money, while teaching her to manage her personal finances, as an adult, she doesn’t feel the same anxiety that many of her peers feel about the subject.

Meanwhile, nothing was ever good enough for John. He was always about the next big thing. He wanted it new, and he wanted it now, preferably before any of his friends had it. John didn’t want practical — he wanted platinum. His parents said he had “big dreams,” but his piggy bank consistently said “broke.”

From a young age, Beth was able to watch her bank account balance increase when she added money and decrease when she made a purchase. Her parents encouraged her to set goals, helped her with her creative business ideas and eventually assisted her in landing her first part-time job when she was in middle school. Throughout her young life, Beth learned valuable sales, customer service and budgeting skills that continue to serve her in adulthood.

John didn’t open his first bank account until he was in high school, when he started working a part-time job. His parents told him to save, but the temptation to buy was too much for him. He thought budgeting was for nerds and rarely kept track of his spending. He was often at a loss as to where his money went, and these habits carried over into adulthood.

The Ultimate Teen Banking Tool

Most of us, young and old, have a little bit of Beth and a little bit of John going on in our lives. It would be nice if we could all be as disciplined as Beth, but the reality is, in this world of instant gratification, it’s hard to be consistently disciplined with our finances. Gone are the days of having to take your passbook into the bank in order to deposit or withdraw money. Debit cards and online banking have become mainstream, which make spending easier than ever.

This fact alone should prompt parents and caregivers to make financial literacy a priority. And for those who are ready to take on this task, there is good news! A new resource has recently hit the market that is simplifying this process — whether you’re the parent of a John or a Beth.

The app is called Indigo. Had Indigo been around when John was a teen, he would have been able to easily keep track of his expenditures and watch his savings grow.

Indigo is a parent-approved banking app that gives teens the freedom to budget, spend and save responsibly. They can shop online using a debit card and set up Apple Pay, all while tracking their expenses with the Indigo app.

With Indigo, Beth will carry on a legacy of financial health.

With Indigo, Beth will teach her children how to be financially independent.

Be like Beth. Save your kids from financial anxiety. Learn more about Indigo.