Mission Not Impossible: You Can Teach Teens Financial Responsibility

Executive Summary: While teens can be hard to reach, the teenage years are the perfect time to teach kids the saving, spending, earning and investing habits they’ll require to enjoy a lifetime free of financial strain and worry.

These days, money in and money out is mostly electronic, meaning the speed at which our children must make the right or wrong financial decisions has accelerated.  Launch your teens’ money management education by explaining to them why most adults fail.

Let children know that the solution can be found in the proven strategies of fiscal self-reliance that are embodied in the Bank on Yourself system and help your teens create their own vision of a secure and rewarding financial future.

There are plenty of practical steps you can take to make the entire subject matter more interesting to teens. By Pamela Yellen and Dean Rotbart

Russ Bragg has a higher financial IQ than most parents. He started out as a credit analyst for an international bank and began offering comprehensive financial planning services in 2000.  He is an expert at helping clients define and then achieve financial independence.

For Bragg, you might imagine, educating his teenage son and daughter about proper money management would be a no-brainer.

If, on the other hand, you have teens of your own, you already know better

Enticed by credit card solicitations with low interest rate come-ons, Bragg’s independent-minded son was in credit counseling by the time he was 18.  Bragg’s daughter, on the other hand, while still a student, applied for and received a prestige credit line that even some of Bragg’s agency clients are unable to qualify for.

“Same mother, same father, same food, same air” and two very different outcomes, observes Bragg wryly of his children’s money management styles.

Many otherwise more-than-adequate moms and dads – those who’ve mastered subject matter as sensitive as teenage smoking, drinking, and drugs – have found their skill sets sorely lacking when it comes to the topic of money.

Welcome to Survivor: Teen Money…

A sprawling multi-year marathon and obstacle course that pits a tribe of well-intentioned parents, grandparents and other adults against the strong-willed, often perplexing sensibilities of the untamed adolescent mind. The challenge? One of modern family life’s most difficult: teaching teens to handle money responsibly.

I remember writing once that as a society we are more comfortable talking about sex and those other issues than we are about money”

Recalls Susan Shelly, a veteran journalist who has written or contributed to more than 30 published books, including The Complete Idiot’s Guide to Money for Teens.

As Ms. Shelly now knows, both as an author and as the mother of one current and one lapsed teen, the mission, although strenuous, is not impossible.

In fact, Ms. Shelly and other experts believe the teen years are the perfect time to acquaint youth with the saving, spending, earning and investing habits they’ll need for a lifetime.  The root of many adult money problems can be traced to a lack of advice or bad advice that men and women received during their teenage years, experts say.

Complicating matters, today’s generation of teens face opportunities and risks unknown just a decade or two earlier

Among these, says Richard Martinez, Jr., president and CEO of Young Americans Bank, is greater spending power than ever before. “Parents are putting more money into their kids’ hands,” says Martinez, whose Denver-based institution is the country’s only FDIC-insured bank designed specifically for young people.

Every moment of their waking day our children are bombarded with messages and pressure from peers urging consumption and instant gratification.  Moreover, technology has elevated buying-on-a-whim to an art form.

Sitting at their computers or thumbing the keys on their smart phones, the current generation of teens can download or order a world of music, entertainment, games, books and services that either didn’t exist a decade ago or at least required the teen to leave the house to purchase.

The need to drive – or be driven – to a retail store sometimes created a sufficient buffer to quell a teen’s impulse to spend, or at least presented the prospect of giving mom and dad an opportunity to intervene.

No longer.  These days, money in and money out is mostly electronic. Direct deposit, debit cards and online banking have each accelerated the pace of money – and accordingly, the speed at which our children must make the right or wrong financial choices.

The task of educating today’s teens can be divided into two parts:  What to say and how to say it effectively

Parents, grandparents and other adults whose own lives and finances have been greatly enriched by following Learn about the Bank On Yourself method… are among the strongest advocates of teaching their time-proven concepts and rules of fiscal self-reliance to teens.

“Financial education for teens and even into college would be just tremendous” as a means to prevent so many of the costly money mistakes that people make as adults, says Reid M. Mortensen, head of Dayspring Financial Solutions in Alton, Illinois, and a Bank on Yourself Authorized Advisor.

Indeed, many successful Bank on Yourself policyholders are one-time honors graduates of the school of fiscal hard knocks.

Rather than safely building wealth and controlling their own financial destiny – recapturing interest payments along the way, those who are unfamiliar with Bank on Yourself too often assign control of their money to large impersonal banks and brokerage houses, paying those giants outrageous interest and fees, and primarily helping them grow wealthier.

Many Bank on Yourself parents and grandparents purchase policies for the benefit of their teens or help their teens start their very own policies

Gerald M. Lohman, an Bank on Yourself Authorized Advisor from El Paso, Texas, has worked closely with his 26-year-old daughter since she was 15 to regularly review her policy and guide her on how to use it to self-finance purchases and investments.

“I have shown her how the (self) financing system works and how she should be a part of that system through her own plans,” Lohman explains.

Other adults begin by sharing the details of their Bank on Yourself-structured whole life insurance plans with their kids even before their children become teens – thus allowing their sons and daughters to witness the wide variety of advantages the Bank on Yourself method provide.

Tim Austin is a well-known and highly respected financial advisor who works closely with parents and their teenage children on strategies that will allow them to pay for college without going broke.  Austin, too, is a big believer in the Bank on Yourself philosophy of financial self-reliance for parents and teens alike.

For his adult clients, he recommends a 10/10/10 style of living: setting aside 10% of gross income for short-term needs; 10% for anticipated mid-term needs and potential emergencies; and 10% for long-term planning.

While the short-term, mid-term and long-term needs of teens may look different than those of their parents – teens are concerned more with paying for college and a car, for example, than retirement – Austin believes teens should nonetheless follow the same 10/10/10 formula.  “If you make $1,” Austin advises parents to instruct their children, then “30 cents has to go into three different avenues.”