7 Places Teens (and Adults) Can Learn About Money
We all want to encourage financial literacy in our teens (and ourselves). But what exactly does that mean, how is financial literacy best accomplished, and where can you go to learn? (See also: The Best Money Tools and Toys for Every Age Group)
What to Learn
Financial literacy is defined by the National Financial Educators Council as "possessing the skills and knowledge on financial matters to confidently take effective action that best fulfills an individual's personal, family and global community goals."
At the practical level, courses and workshops on financial literacy typically cover one or more of these topics:
Developing financial literacy and competency is a two-step process. First, learn foundational, timeless principles for managing money (e.g., spend less than you earn to save money; take more risks to earn higher investment returns).
Next, develop an understanding of real-life practices, which evolve with trends and technology. For example, comparison shopping and investing today is much different than years ago before mobile apps and online discount brokerages. Regulations pertaining to taxes, saving for retirement, handling financial transactions, and more also change frequently.
Understanding a general principle is important and then learning how things work within the current context is crucial for navigating personal finance.
How to Learn
In my experience, the best way to learn is to gain knowledge about key topics and then field test principles in the real world.
For example, I've discovered that some banks are more likely to alert you to problems or waive fees than others, despite what their printed materials may state. Similarly, the concept of risk tolerance is best grasped by gauging my reaction to investment losses following bad economic news, not by listening to a lecture about market fluctuations.
The hands-on approach reinforces concepts in ways that simply consuming information cannot. Still, personal trial and error can be a costly way to learn. Talking with your parents, friends, and colleagues about their experiences can be an effective way to gain insights into financial matters without the money-related consequences.
An effective program is project-based, fun, interactive, and relevant to current needs according to Jim Clark, President and CEO of the Boys & Girls Clubs of America. His organization offers a financial literacy course that has educated more than 500,000 teenagers since its inception about 10 years ago. He attributes its success to a design that "puts concepts into practice through experience."
Where to Learn
There are many places to learn about personal finance, many likely available in your area. Take advantage of opportunities in places you already go, like high school or the library, or seek out courses beneficial in helping you to make good decisions without angst. Here are several places that you may want to check out.
1. Boys & Girls Clubs of America
An adult facilitator who is a positive personal-finance role model guides participants through lessons that include discussions of real-life experiences in a small group setting. These talks include challenges that teens face, such as finding money to attend college and lessons learned from mistakes, such as bouncing a check or getting dinged with late fees. Through sharing of struggles and triumphs, along with adult mentoring and guidance, teens learn good financial practices from each other plus receive support and encouragement.
Teens are kept engaged by being recognized for their efforts and given a forum to “show off.” For example, Money Matters graduates are recognized for completing the program and are eligible for college scholarships. They can also participate in the Money Matters Music Mogul contest.
For adults 50 and older, AARP offers a three-part workshop entitled AARP Foundation Finances 50+, a new program also developed and sponsored by the Charles Schwab Foundation. Face-to-face guidance is offered in several metropolitan areas. The participant guide and volunteer leader guide are available for free (you can download files or order a printed copy).
2. Student-Run Banks and Credit Unions
Banks and credit unions may have branch offices in local high schools. Students who help run the branches can develop working knowledge of banking systems. Often, hands-on experience is combined with a business class associated with the bank or credit union operations.
Teenage customers can open and manage their accounts at these branches, allowing them to become familiar with banking practices. Specific skills they gain are basic but essential, such as how to open an account, make a bank deposit, check an account balance, and withdraw money for expenses. Plus they can learn that though banking services are often available 24/7 online, branch offices have limited hours.
Local credit unions may offer educational resources that cover topics such as establishing credit, borrowing for your first home, and general money management.
For instruction on how your checking account and savings account work, arrange to sit down with a knowledgeable representative. They should be able to explain monthly and transaction-based fees, ways to minimize fees, and methods of avoiding a shortfall or insufficient funds for payments you initiate.
3. High School Civics and Economics Classes
Though both of my kids have taken required coursework in civics and economics, the class seemed to make the biggest impression on my youngest son.
Most memorable was the documentary "Maxed Out," which the teens watched in class. The film covers predatory lending practices of many financial institutions. My son’s synopsis of lessons learned: “you go to college, you get a credit card, you max out the credit card, and then you die.”
"Maxed Out" is available for viewing online and through streaming services, such as Netflix.
4. Scouting Programs
Scouting programs, such as Boy Scouts of America and Girl Scouts, offer many ways for teens to learn about personal finance and money management. Fund-raising activities for camping trips, special outings, and troop operations can help kids of all ages understand that money is needed for various activities. Plus, there are lessons to be learned from Girl Scout cookie sales.
Badges for financial empowerment in Girl Scouts (PDF) cover topics such as budgeting, comparison shopping, establishing credit, saving for large purchases, and entrepreneurship. The Boy Scouts’ Personal Management merit badge deals with planning for major purchases, making decisions about investing, household budgeting, and more.
Parents can learn by teaching badges or sitting down with their teens as they cover the curriculum. They may find badge exercises to be useful, such as tracking income, expenses, and savings for 13 weeks (PDF).
5. College Classes
Many colleges and universities offer personal finance classes as part of their degree programs. Courses may be focused in investments, fixed income, real estate investing, and entrepreneurship. Learn in your teenage or young adult years before entering the workforce or starting a business.
Pick up classes at your local university or community college offered through continuing and professional education. Choose among courses such as personal taxation, retirement planning, and investing.
6. Community Venues
Seminars and workshops on financial topics for adults are generally available at public libraries and community centers. Multi-week courses, such as Financial Peace University, are often held at churches and other houses of worship or community gathering places.
You can learn about money at home, often in collaboration with your parents, siblings, and friends.
Things that my teens have learned recently include how to:
- Sell items on eBay
- Get college textbooks and supplies at a discount
- Transfer money from PayPal accounts to bank accounts
- Delay spending to get a price reduction
- Forgo spending to save for future needs
- Set aside gifts and windfalls for large purchases
They’ve also learned that savings accounts pay very little interest right now though having money set aside is valuable by itself.
There’s much more to learn but I’ve found that teens learn best when financial lessons are timely and relevant. Instructors can be parents, sisters and brothers, and friends who are willing to provide guidance and give ideas on what has worked for them.
When you are ready to make a financial decision, learning all about a subject is desirable. Tapping the knowledge of your spouse, parent, friend, or even teenager can help you navigate personal finance issues.
A big difference between adults and teens, though, is that there are many topics you need to understand now, before a crisis or major financial decision. For example, you can’t wait until retirement to figure out how to generate income for household expenses. You must learn today how to develop streams of income to fund your retirement in the future.
Many financial literacy programs encourage you to apply concepts while you are participating. If not, though, act on your own. Open an IRA and start investing soon after you finish an investing class, for example. The sooner you use newly acquired knowledge, the better for your financial literacy and the faster your financial savvy will grow.
Where have you learned financial literacy?