Our instinct as parents is to provide and protect. This has become even more apparent as we navigate our way through the current COVID crisis. But our kids, especially our teens, are more resilient than we sometimes give them credit for.

Opening up and talking about the family finances (within reason) gives them an opportunity to ask questions, gain understanding and ultimately be better prepared for their future.

For most, they will face tough financial decisions and being equipped with the skills to navigate their way through those decisions is perhaps one of the best gifts you can give them.

Children pick up on and mimic the behaviour of their parents and their peers. From a young age they are forming their financial understanding, through the games you play together and from listening to and watching your attitude and behaviour to spending and saving.

Everyday events from shopping to paying bills, saving for bigger ticket items and bringing them along when you lodge money to your account are learning opportunities and can help start the discussion around money and goal setting.

As they get older, enlist their help to research things like insurance, household bills, holidays, etc. Could they help save the family money or find a better way to get away for a family break? Can you reward them by sharing a portion of the savings in return for their help? By doing this you are equipping them to want to research in the future when it is their money and they are looking for ways to save and spend wisely.

Most teens have a basic understanding of where money comes from. Talk to them about ways they can earn money. You may choose to pay your teen for chores or they may help neighbours with babysitting, car washing, grass cutting, etc. As they grow, encouraging them to apply for a summer job, where they may have to pay tax and learn to use a tax estimator, are all great ways to show them the time and effort required to get money.

It is also good to have the conversation around future plans. Jobs they think they may like and what they may need to do to get there. So chatting about interest areas, looking at college courses and drilling into what they offer, and even looking at recruitment websites to get an idea of what salary they can expect are all ways to help them plan their financial future better.

Once your teen reaches 18, the offers for credit cards, store cards and other tempting offers will come flooding in. Talk to them about their credit score and how easy it is to get into debt. Explain how a credit card works and what happens if you don’t clear the debt each month.

Investing in stocks and shares can be an exciting way to teach your teen about risk and reward.

“The stock market is just one big shop. Instead of buying a chocolate bar in that shop, you can buy a piece of the company that makes chocolate bars. If the company that makes the chocolate makes a profit, it’s worth more, and the price you bought it for may go up. Maybe that company will decide to give the profits directly to the people who own the shares and that’s called a dividend. If the company makes a loss, which can happen, the share price can go down, that’s called a risk,” explains Susan Hayes Culleton, CFA, “The Positive Economist” and author of Money Matters.

There are also other investment opportunities open to them, including crypto currency, starting their own business, and investing in other financial products or services.

Talking through the options with your teen and doing the research helps them make an informed choice, but they do need to understand the risks to their investment and only risk what they can afford to lose.

Money Matters is a financial literacy textbook with the support of CFA Ireland. It is written as menu of personal finance, investing and entrepreneurship life skills.

The book is tailored for young people in the following ways:

• It is story-focused whereby students can learn about pensions through characters like Sarah who starts her first job and is wondering what “tax relief” means for her.
• It is full of relevant modernity including ESG, fintech, online brokers, differentiating between trading and investing as well as using technology for active learning.
• It gives a real taste of the diversity of careers available today and tomorrow in finance. Each chapter contains a case study of a CFA Institute charterholder and highlights how the the theory learned in subjects like accounting, business, maths and economics connect with the practicality of everyday life and life-changing decisions.

Find out more and buy your copy here  so you can start talking to your teen about money and finances.