As a dad, you’re a provider, teacher and coach. You look out for your kids, help them navigate the road of life and ultimately prepare them for a future in which they can take care of their own families. For parents of teens, part of preparing them for the future is being a financial mentor and making sure they are ready for the “real world” of personal finances. This Father’s Day, when you’re spending time with your teen, chat about how being financially responsible can benefit their future. To get you started, here are three quick money lessons to share.
1. Enjoy today but save for tomorrow. In 2005, the average savings rate in America was the lowest it’s been since the Great Depression. While our savings rate is slowly increasing, it is still too low. As a result, the average American is not adequately prepared to buy a car, put a down payment on a home or pay for a vacation. Many Americans will need to delay retirement well into their 70s. To help your kids avoid the same mistakes, teach them how to save and spend. Assure them you don’t want to take away all the fun – having some spending money is key. Do ask them to save half of their summer earnings to teach them the concept of saving for the future. They’ll learn that adequate savings provides financial freedom and allows them to buy things they need and want without stress.
2. Work hard but don’t forget what’s important. Most dads know work and money go hand in hand. However, many adults assume money brings happiness, which is not necessarily true. Money can provide financial stability and the opportunity to enjoy many things in life, but it isn’t everything. Research shows once a household achieves $75,000 in annual income, there is no correlation between money and happiness. Encourage your teens to achieve an adequate income, but not to sacrifice their health or time with family in pursuit of material things. Reinforce that money can enhance their lives when managed correctly, but it isn’t the sole key to happiness.
3. The Scout’s motto: Be prepared. Dads want their children to be prepared for an emergency. They remind us to have a flashlight handy, make sure our spare tire has air and to take a jacket in case it gets chilly. Similarly, the financially wise father wants his teen to be prepared in the event of a financial emergency. This includes teaching teens to have an emergency fund to cover at least six months of living expenses. Talk to them about critical components of financial safety for young adults like having car, renters and health insurance. Talk to teens about the peace of mind that comes with being prepared for a financial emergency and help them determine ways they’ll begin to build their own financial safety net.
Dads can show how much they care about their teens by talking to them about personal finance. Someday, they’ll thank you!