Talking to your high schooler about finance
Engage your high schooler with these activities and conversations centred on making the best decisions about their money.
CIBC
Jun. 30, 2020
4-minute read
Your 14- to 18-year-olds are in the final stretch of approaching adulthood, and you have the opportunity to shape their financial behaviour while having some interesting dinner table conversations as you do. Many teenagers have after-school jobs that are a great source of income, pride and accountability. Your conversations with them now about the money they're earning can help them make the best decisions about money today and in the future.
Start with these 3 engaging conversations
The value of time
The concept of compound interest is fascinating, and one they may have covered at school. Talk to your teenager about the concept of saving a portion of their income for their longer-term goals. For example, experts say a good habit to start young is saving 20% of income through a regular savings and investing plan. Show your teenager how saving early and regularly can support their financial goals with our interactive investment growth calculator. They'll see how small, regular, biweekly or monthly investments can grow into significant savings over time. Try this with your teenager, having them enter and change the variables to understand the impact of compound growth.
Expense attack
At this age, your teenager may be tempted to spend their money on things like iced coffees or a trendy jean jacket. This is a good time to help your child understand the difference between needs and wants, so they build healthy spending habits early on. Needs are essentials, such as food, and can also include fixed expenses like a monthly cellphone bill. Wants are variable expenses, fluctuating in cost from month to month, and may not be absolutely necessary – like this season’s jean jacket. More importantly, a want is something your child can have control over. Assist your child in reviewing their expenses to understand their habits, including which purchases were needs versus which purchases were wants that could be reduced or even eliminated. Focus on a few expenses and how they can add up over time.
For example:
- Phone bills getting out of hand? Solution: Review the phone plan together. Consider looking into whether you can rework or lower the cost of your plan.
- Spending too much at coffee shops? Solution: Try making coffee at home instead. Make it a fun activity you do together. Explore specialty recipes, such as whipped coffee or easy lattes.
- Finding it hard to resist impulse buying online? Solution: Consider an approach where you add items to your cart, and then wait for 24 hours before making the purchase. This allows you the chance to think about your purchase prior to checking out.
- Seem like you’re spending a lot on streaming services? Solution: Capture each streaming app and its cost on a list, and then assess to figure out if you can eliminate any you don’t use often or any offering similar content.
Wish list
An effective way to improve your teen’s financial literacy is to review not just the cost of purchases but also how those purchases relate to their values, goals and personal happiness. Have your teen make a list of 10 items they'd like to buy right now. These items can range in price from something small, such as a new bike helmet, to something large, like their first car or a significant donation to a local charity. Then, ask your teen to assess each item against 3 criteria:
- This item represents my personal values
- This item will help achieve one of my goals
- This item will make me feel happy
Together, review which of these purchases matter more to your teen and are priorities for saving and eventual purchase.
Need some financial advice?
Book a chat with one of our advisors. They can help set you up for success, today and into the future.
