A Practical “Top 10” for Teen Financial Literacy by Neale Godfrey

From time to time, we will be featuring advice from financial experts, educators, and other influencers in the field of parenting and money management.  This week we are featuring Neale Godfrey, #1 New York Times Best Seller for Money Doesn’t Grow on Trees: A Parent’s Guide to Raising Financially Responsible Children.  Here is what Neale has to say:

People like to say “money speaks.” But what it’s saying to your teenage son or daughter depends in large part on the type of dialogue you’ve already begun with your child when it comes to money, how it should be spent, and how it should be saved.  Unfortunately, study after study paints a troubling picture for an American teens’ knowledge of financial literary, defined as a basic understanding of how money works.

A recent study by the nonprofit, Jump$tart, reveals that fewer than half of teens surveyed correctly understood that paying the minimum balance on a credit card was more costly to the cardholder versus paying the balance in full.  And, college-age student debt remains high; a clear sign that we have a long way to go.

But here’s the good news. Of all the life skills that begin being taught in the home, financial literacy is in some ways the easiest and most practical to get across. No hardcover textbooks are needed.  Nothing about economic theory need be addressed, and you can leave terms like “credit default swap” somewhere else. The following list offers a pragmatic, and even a fun and engaging way parents can begin the financial literacy discussion.

1)        Talk to your teens about money, and maybe address a daily financial news story at the dinner table. Don’t expect them to magically understand what money can and can’t do without your input. Come clean about your financial circumstances.

2)        Make your world your classroom. Show your teens how money works in real life. For instance, when grocery shopping, indicate the amount of money you’ve budgeted for the outing, price comparison, and the mental balancing act that address necessity versus luxury/non-essential purchases.

3)        Your teens should have an allowance. Even discussing the allowance amount can make for a healthy discussion concerning a family’s budget to provide an allowance in the first place. Chores are a time-tested great way to earn money.

4)        Some chores around the house should be done without pay, as you are teaching teens to become not only good citizens of the household, but also of the community and the world. You decide what’s in this category. I’d put recycling, composting, and anytime I ask for help when I’m carrying the grocery bags into the house into this category.

5)        Start a simple budget with your teens.  Let them (with you) figure out quarterly what they need to spend on clothing, for instance.  Remember, help them to divide their budget into: charity, spending, and saving.

6)        Your teen needs to start to earn some money outside of the home.  A summer job is the best way – even the current economic climate (which has a lot to do with poor personal fiscal management) has made it harder for teens to find summer work. Consider that added challenge another financial teachable moment.

7)        Encourage your teen to give 10% of their allowance or money earned to charity.

8)        Giving is also giving-of-yourself.  Help your teen to locate an organization with whom to volunteer. They could serve meals at a soup kitchen or read to the blind.

9)        Start getting your teen involved with real financial products.  They should have a savings account and also a checking account that is connected to a debit card. Start with a debit card to build and foster teen-parent trust. Let your child demonstrate that they can stay within a budget and not be tempted to over spend.

10)      It’s time to introduce your teens to the stock market.  Let them research a company they know: an entertainment company, clothing company, computer company, etc.  Let them put part of their savings (approximately $250) that you’ll match to begin investing. The rule is “Buy & Hold”—no day trading!  Let them use your financial advisor, or find a discount broker to start the process. Invite your teen to join you in a meeting with your financial advisor.

Too often, the only financial literacy a child experiences in the classroom is during their most formative years when learning symbolic math. You remember those lessons: basic word problems with pictures of money like coins and dollar bills. Add up the coin’s symbolic value, (5 cents, 10 cents, etc.) in order to solve the problem. That’s just not enough. If there’s any silver lining to the after-effects of the Great Recession is that it addresses front and center the importance of following financial news and of improving one’s financial literacy. So speak to your kids first, today, before the money does.

If you’d like to learn more about Neale, click here to read her full bio.

Also, WealthQuest for Teens invites you to visit Neale’s social media sites:

© WealthQuest for Teens, Ltd., 2011 All rights reserved worldwide.



  1. Excellent top 10 list. We also like to give our teens the experience of paying back a long term (1 year+) loan to the Bank of Mom & Dad. A laptop for school is the most typical item. We “garnish” their wages/allowance to make payments each week. It teaches the value of a dollar in a concrete way, and the added bonus is that they take much better care of the item.

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