With daily news reports about rising inflation, what is a parent to do? Financial stress, especially on the young, is real but there are things you can do to not only get through this time, but help your kids thrive today and in the future. As an experienced financial advisor and mom of three, I can tell you how we are taking advantage of the financial uncertainties of today and how you and your family can too.
True, evidence of money worries is all around us.
My tween heard his lunch buddy’s mom is worried that she might be laid off and they might have to move. You may be surprised by how much our children are hearing and how grown-ups’ financial worries are affecting them. Even at my kids’ sporting events, I hear parents discussing how stressed they are about financial concerns. And reports with headlines that read, “Consumer confidence in where the economy is headed hits 12-year low”, like this recent one, are typical and add to the worry people of all ages can feel.
As an experienced financial advisor and mom of three, I can tell you how we are taking advantage of the financial uncertainties of today and how you and your family can too. Now is the time to revisit emergency savings plans, have conversations with your teen about economic uncertainty and reinforce budgeting, income planning, and financial resilience.
Initiate age-appropriate money talk: Financial literacy among U.S. youth is alarmingly low. A Consumer Financial Protection Bureau study revealed that only 27.2% of young individuals aged 15-18 scored above 70% on a financial literacy exam. You can help your young children by using tangible items like coins or play money to teach basic concepts of saving and spending. Involve teenagers by including them in budgeting exercises, such as planning a family outing within a set budget.
Encourage questions to foster an open dialogue about financial matters. Explain inflation, tariffs and the importance of an emergency fund. Economic concepts like inflation and tariffs directly impact daily expenses. With inflation rates fluctuating, it’s vital to discuss how these factors affect purchasing power. You can illustrate inflation by comparing the cost of common items today (like avocados!) with their cost five years ago. As for emergency funds, emphasize that only 39% of Americans have enough savings to cover a $1,000 emergency, underscoring the necessity of having a financial cushion. You can also start a family savings challenge to build an emergency fund together.
Teach simple budgeting, saving, and addressing layoffs: Financial education programs have been shown to improve financial behaviors, emphasizing the importance of budgeting and saving. In creating a family budget, allocate portions for necessities, savings, and discretionary spending. Diffuse the fear of layoffs by explaining they can occur due to various economic reasons and discuss strategies to manage finances during such times. Involving children in financial planning fosters a sense of responsibility and preparedness. That can also help remove some of the fear around layoffs.
Plan for future education expenses together: With potential changes in educational funding, proactive planning is essential. Research published on ScienceDirect indicates that children with savings designated for education are over four times more likely to graduate from college.
Explore 529 plans, tax-advantaged accounts designed to encourage saving for future education costs. Talk to a financial advisor about this and explore options as soon as you can.
Consider dual enrollment, in which some states offer free or reduced-cost college courses to high school students, helping them earn credits and potentially reduce the cost of college overall. My oldest does this now, and they are some of his favorite classes, which can help set him up for success (and save us tuition money) once he leaves home.
You might start a convo with your child by saying, “Let’s talk about why college is important, how much it costs, and how we can plan for this together.”
Teach about credit scores and building credit: Understanding credit is fundamental to financial health. However, only 17% of U.S. adults reported taking a personal finance class in high school. Give your child practice in using credit wisely by adding your teen as an authorized user on a responsibly managed credit card to help them begin building credit. Discuss how payment history, credit utilization, and length of credit history affect credit scores. You can use online tools to simulate how different actions impact credit scores.
Encourage creative income generation: Developing entrepreneurial skills can provide financial independence. Financial literacy among U.S. youth is improving, with 45% of high school students having taken a personal finance or financial literacy class. However, gaps remain, as 55% have not received such education. Brainstorm age-appropriate income-generating activities such as tutoring, pet sitting or digital content creation. Encourage setting financial goals to motivate entrepreneurial efforts. Earning and managing money instills confidence and practical financial skills.
Keep calm and carry on during times of financial instability: Financial literacy is linked to better financial behaviors. Studies published by the National Center for Biotechnology Information and National Institute of Health show that well-implemented financial education mandates lead to improved financial outcomes. Practice mindfulness by engaging in activities that reduce stress and promote clear thinking during financial discussions. Explain that markets have periods of highs and lows and long-term planning is key.
Talk openly about future job stability and career planning: Let’s face it, the job market is evolving, with certain industries being more susceptible to automation and AI advancements. Financial education can influence career choices and preparedness. AI is profoundly reshaping the job market, influencing both the displacement of certain roles and the emergence of new opportunities. According to the University of San Diego, AI’s dual impact includes automating existing jobs while simultaneously creating new positions that demand advanced skills. The U.S. Bureau of Labor Statistics projects a 15% increase in computer and information research jobs from 2019 to 2029, encompassing roles like AI specialists and machine learning engineers. Explore industries projected to grow and those at risk of automation and encourage acquiring skills that are transferable across various fields.
Ask, “What future careers align with your interests and skillset. And, what will offer stability in a changing job market?”
Highlight skills valued by today’s employers: There are some great articles interviewing the leaders of today’s top companies and the skillsets they are seeking and find valuable. Employers increasingly value both technical and “soft” skills. Financial literacy programs have been linked to improved academic outcomes, which can enhance employability. According to Indeed’s article on the top skills employers seek, the following are highly valued. Effective verbal and written communication is essential across all industries. Also look for Harvard’s and MIT’s free courses on communication and leadership.
Here are some other good resources:
Problem-solving, critical thinking, adaptability: FutureLearn, “Logical and Critical Thinking,” University of Auckland, is designed to improve reasoning and decision making–great for teens Designed to improve reasoning and decision-making — great for teens. Also check out Success in the Workplace, a course of OpenLearn by Open University.
Technical and computer skills: Khan Academy courses are free and great for learning Intro to javaScript, HTML/CSS and computer science fundamentals. Also see Harvard’s CS50 on edX and MIT OpenCourseWare which offers computer science and math courses at no cost. It’s great for advanced learners ready to dive deeper.
Career readiness and work ethic: Try LinkedIn Learning (free via library). Popular courses include “Time Management for Teens,” “Professional Soft Skills for the Workplace” and “How to Be More Productive.” Entrepreneurship and financial literacy: JA Connect by Junior Achievement is great for teens interested in starting a business or learning personal finance. It offers interactive tools and videos on budgeting, saving, and career exploration. Next Gen Personal Finance is a trusted curriculum used in schools. It offers free, self-paced courses on credit, budgeting, investing and taxes.
Mentorship and real-world exposure: Girls Who Code and Black Girls Code offer free and low-cost coding education with mentorship opportunities. They are open to all backgrounds; many programs are virtual. VolunteerMatch.org helps teens build teamwork, empathy, and leadership skills through virtual volunteering.
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