Teaching Your Teenager About Finances: A Reality Check (With a Side of Humor)

Alright, parents, let’s face it: teenagers think they know everything. Teaching teenagers about budgeting can feel like climbing Mount Everest, but it’s a crucial step in preparing them for real life. But ask them how much rent costs, and they’ll probably say, “Like, $500?” Bless their sweet, clueless hearts. That’s where we come in, ready to drop some knowledge and maybe a dose of reality. So, grab your coffee (or your stress ball) because it’s time for a little family finance 101.

Step 1: The Dream Job Chat

Start by asking your teenager what job they want when they’re older. Pro tip: try not to laugh if they say something like “professional gamer” or “TikTok star.” Instead, encourage them to research the salary for their dream career. Sites like Glassdoor or the Bureau of Labor Statistics are great tools for this.

Once they’ve got a number in mind, hit them with the reality of taxes. Explain that Uncle Sam takes a chunk of every paycheck. For example, if their dream job pays $50,000 a year, they might only take home about $40,000 after taxes. Surprise!

Step 2: The Cost of Adulting

Next, walk them through common living expenses and help them understand the true cost of living for young adults. Breaking this down can make the numbers hit home. Here’s a basic breakdown:

• Rent: The national average for a one-bedroom apartment is around $1,300 a month. And don’t forget renter’s insurance (about $15-$30 per month).
• Utilities: Electricity, water, and internet will run around $200-$300 monthly.
• Car Costs: Monthly car payment ($400), insurance ($100+), and gas ($150).
• Groceries: Around $400 per month for a single person (assuming they don’t live on ramen).
• Cell Phone: $50-$100 per month.
• Extras: Things like gym memberships, streaming services, eating out, or their precious Starbucks habit.
• Emergency Fund: Set aside at least $100-$200 per month to cover unexpected expenses like car repairs, medical bills, or other emergencies.

Here’s a table showing how $40,000 in income breaks down:

Remaining Income: $40,000 – $35,460 = $4,540 per year (or about $378 per month)

As you can see, living costs money – a lot of it. And this doesn’t even include budgeting for things like clothing, entertainment, medical expenses, or other personal costs. This exercise will help them understand the importance of budgeting and making wise career choices.

Step 3: Career Choices Without a Degree

A college degree can be great, but it’s not the only path to success. Exploring career options without a college degree is a great way to show them alternative routes to a fulfilling career. Many high-paying careers don’t require a four-year degree, such as:

• Electrician or plumber: Average salary is around $60,000 per year. Training typically involves a 4-5 year apprenticeship and certification.
• HVAC technician: Average salary is around $50,000 per year. Training typically involves 6 months to 2 years at a trade school and certification.
• Dental hygienist: Average salary is around $77,000 per year. Requires an associate degree in dental hygiene, typically 2-3 years.
• Web developer: Average salary is around $78,000 per year. Training can range from a few months in a coding bootcamp to a two-year associate degree.
• Real estate agent: Average salary is around $50,000 per year, but this can vary greatly. Requires completing a real estate course (a few weeks to a few months) and passing a licensing exam.

Step 4: College on a Budget

If college is in their future, let’s talk strategy. Saving money during college is not only possible but essential, and starting at a community college can be a smart move. Community college is a fantastic way to knock out general education classes for a fraction of the cost. The average cost of community college is about $3,800 per year, compared to $10,000-$20,000 for in-state tuition at a four-year university (and much more for out-of-state).

Living at home during college can save thousands. Sure, they might complain about your “nagging,” but when they’re debt-free, they’ll thank you.

Step 5: The Price of a Degree

The average cost of a bachelor’s degree from a public university is around $25,000 per year (in-state). Out-of-state? Closer to $40,000. Private universities can go up to $50,000+ annually. Scholarships, grants, and work-study programs can help, but many students still rely on loans.

Explain how student loans work – including interest rates and repayment terms. When explaining student loans to teenagers, use simple examples to show how debt can grow over time. If they take out $40,000 in loans, they’ll end up paying back much more over time. Ask them to consider whether their dream job’s salary justifies the cost of their degree.

Step 6: Paying for College While in College

Here are some ways they can help pay for their education without drowning in debt:

• Scholarships and Grants: Apply, apply, apply! There are scholarships for everything from academic achievement to having a unique hobby. For example, look for scholarships based on academic performance, athletic ability, volunteer work, field of study, or even unique talents (yes, there’s one for duck-calling). Websites like Fastweb, Scholarships.com, and the financial aid office at your local community college are excellent places to start your search.
• Work-Study Jobs: Many colleges offer part-time jobs that fit around class schedules. Examples include working at the campus library, assisting professors with research, helping in administrative offices, or working in the student recreation center. These jobs are often listed on the college’s financial aid website or through the campus career center.
• Side Hustles: Freelancing, babysitting, delivering food, tutoring, selling handmade crafts, or pet sitting can bring in extra cash. You can even juggle multiple side hustles if you plan carefully around your class schedule. With some strategic time management, you can optimize your income while still staying on top of your studies.
• Internships: These not only pay but also provide valuable experience in their field. For example, internships in marketing, engineering, IT, or healthcare can give your teen a head start in their career. To find these opportunities, encourage them to check job boards like Indeed or LinkedIn, attend career fairs, or visit their college’s career services office.

Final Thoughts

Teaching your teen about finances isn’t just about numbers; it’s about setting them up for a future where they can thrive without drowning in debt. Sure, they might roll their eyes now, but when they’re living comfortably and budgeting like a pro, they’ll secretly thank you (and maybe even buy you dinner).

So go forth and have the money talk. And if all else fails, remind them: ramen is cheap, but a well-planned career is priceless.

Ready to start the conversation? Sit down with your teen this week and review their dreams, goals, and the numbers behind them. Show them the power of budgeting and planning for the future – it could be the most valuable lesson they’ll ever learn. And don’t forget to share this post with other parents who could use a little financial wisdom in their toolkit!

What financial lessons have you shared with your teen? Drop your tips, success stories, or even the funny moments in the comments below!