Talking to your teen about money is one of the best things you can do for them—and tax season is as good a time as any to start that conversation. Having an open dialogue with your teens about finances will give them the knowledge and experience needed to make their own financial decisions.
Here are our tips on how to talk to your teens about this time of year—and other money lessons.
Explain why we pay taxes.
Kids experience taxes way before they start working—the first time they buy something, for example. Ward suggests that this is a great opportunity to start the conversation early because a kid might be wondering why an item is more expensive than they thought it would be. Explain what sales tax is, how much it is, and why we have it.
It is also important to talk to your teen about the different types of income that they will be taxed on. For example, if they work in the service industry and get tips, they will be taxed on that. Also talk to them about things they will not be taxed on, such as a college scholarship.
Have an open, ongoing dialogue about money.
When you talk to your teens about money, try not to make it a lecture. Instead of a lecture, give kids financial guidance in small, digestible pieces as they go through life. Take them to the bank with you, or call them over when you're writing or depositing a check (this can be digitally if your bank has that option).
Part of having an open dialogue about money is being honest. Many parents are facing financial hardships from this past year, and while your instinct might be to protect your kids from that, Ward believes it's a good idea to let them in on some of the realities of your family's finances.
Open a savings account.
Another big part of talking to your teens about money, beyond tax season, is teach them about saving options. Tax-free savings accounts, education savings plans, and retirement savings plans are all important options to discuss. Learning about saving while they are still living at home can really set your teens up for financial success later.
