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Financial Literacy

How to Talk to Your Teenager About Money

Barry Choi
Barry Choi

Trying to talk to your child about money when they are about to enter their post-secondary education can be difficult. Many parents may still be looking to oversee some aspects of their kids’ lives, while teenagers are likely ready for more independence.

It doesn’t matter if your child will live at home or on campus, if their schooling is fully funded or they are self-funding, while attending college or university; parents need to start the conversation about money, so their children are set up for a better financial future.

Set the right tone

The first thing to understand is that your children may have already picked up money habits from you. Even if you haven’t directly talked about finances with your children, they’ve witnessed how you spend and save. Those are some habits they’ve already integrated into their own day-to-day lives. For example, if you’re a frugal parent, your kids are likely natural savers.

Whether this is the first talk with your kids about money, or you have regular conversations, you must ensure you’re talking to them like adults. Explain to them that they need to have a good working relationship with money as a tool that can help them achieve some of their goals in life. You’ll also want to share that money won’t solve everything. The best thing to do is start the conversation so your children will be encouraged to learn more independently or come to you when they have questions.

Encourage financial independence

Some parents cut their kids off financially when they turn 18, but that may do more harm than good. A better approach might be to encourage financial independence. An obvious place to start is to encourage your child to get a job. The money they make can offset tuition costs that their Registered Education Savings Plan doesn’t cover. Even if their tuition is covered, earning money now can help with savings and fun.

If your child lives on campus, you may want to get them to do simple exercises such as tracking expenses and creating a budget. This will likely be their first time managing a budget, so it can be a real eye-opener for them. It’s also a good idea to show your kids your own family budget so they get a clear picture of what costs they’ll need to factor in and how you’ve been able to manage things.

Talk about personal examples

Even though you may have already established a financial tone with your children, discussing any personal examples you have is essential. Try to talk about issues you were facing at their age. While your personal experiences may not be relevant to what your kids are dealing with now, it’s more about explaining that you also had particular struggles and had to find ways to deal with them.

It can also be beneficial to talk about any money related trauma that you may have had. For example, how you were able to use your own post-secondary education into a career and financial standing that you’re now proud of. Alternatively, if you didn’t take a traditional path, you can share how you created stability for yourself, and the difficulties you may have faced in reaching success. The tricky part here is that you don’t want to put too much pressure on your kids. It’s important to tell them what happened to you but expecting them to do better is not fair.

Provide resources

Since it’ll be impossible to teach your post-secondary aged children everything about personal finance, you’ll want to point them in the right direction. The government of Canada provides great unbiased articles so kids can read up on various topics as needed. Another great resource could be a book on personal finance that’s written by a Canadian. This will give your kids some essential beginner education relevant to the Candian financial system that they can build on.

It’s also worth researching what legitimate financial influencers can be found online. There are some great educators on social media, so you could point your kids in that direction. Be sure to explain to your kids that not everything they read online is legit. In fact, there are many users out there looking to profit off people who don’t know any better. You want to ensure your children can tell the difference between someone that’s legitimate, and someone that’s trying to get them to part with their cash.

Talk about funding for their post-secondary education

If you opened a Registered Education Savings Plan (RESP) for your child, it’ll soon be time to unlock some of the funds. It can help to explain this process to your child so they can understand the process. It’s not just about the money they’ll soon get to pay for their education, but it’s also about how the money was saved and invested so they won’t have to incur the entire financial burden of continuing education.

If you don’t have a RESP set up, you can help your children apply for financial aid. Every province and territory have guidelines, so you’ll want to research early based on where you live and where your child plans to go to school. Reviewing what your child will have available to them is a great starting point to help them navigate budget building. It’s also worth noting that there are many available grants that don’t need to be paid back.

Final thoughts

While it’s important to talk to your kids about money, be sure that you’re going about it in the right way. Graduating from high school and heading to a post-secondary institution is a major milestone. Many different things are going on in students’ minds, so it may take them time to prioritize their finances. By having casual conversations and leading by example, you can help guide them.

Barry Choi
Written by Barry Choi

Barry Choi is an award-winning personal finance and travel expert. He regularly appears on various shows in Canada and the U.S., where he talks about all things money and travel. His website - Money We Have - attracts thousands of visitors daily, looking for the latest stories on travel and money.