This is the third blog in a four-part series, designed to help you engage your children in conversations about wealth.

Read part 1: Talking with children about wealth 

Read part 2: How to engage children up to age 11  

Middle and high school years are busy. Balancing school, activities, hobbies and social life isn’t easy. More and more, tweens and teenagers want to figure things out on their own, including how to manage their money. With so much going on, your support is important to help your kids establish and maintain financial goals, and to help lead them to long-term financial success. 

Consider some of the following strategies that can help children this age develop their financial independence while learning critical skills:

• Goal planning: Children at this age tend to have interests that are more expensive, like electronics, musical instruments, movies, concerts and other activities. To help children track their financial goals and learn that good things come to those who plan for them, consider introducing a goal planner. A useful goal planner should include both short-term goals, for those items that are less expensive but can provide immediate rewards, and long-term goals, for those larger or more expensive items that will take some restraint and patience to achieve. 
• The miracle of compounding: If your child doesn’t already have a bank account, now might be the right time to transition from a piggy bank to a real bank, preferably with an interest-bearing account where the benefits of compounding can be introduced. When used in conjunction with a goal planner, a savings account helps demonstrate the benefits of setting money aside and putting it to work.   
  • In a low interest rate environment, compounding may be tough to come by with a traditional savings account. Instead, consider using an app like FamZoo, which allows you to credit an interest rate of your choosing and simulate an interest-bearing account without having to set up a formal bank account.
  • Alternatively, consider establishing an investment account for your tween or teenager. This offers another opportunity to put their money to work while learning the basics of investing (e.g., stocks vs. mutual funds, dividends vs. interest).

• Budgeting 101: Even if they do not always show it, your teenagers need your financial guidance to encourage them to save, understand the difference between needs and wants, and learn how to budget. But the word “budget” often conjures images of stern taskmasters telling you that you cannot have the things you want. Keep the following ideas in mind:
  • Properly regarded, a budget can help your children learn how to save and spend precisely, so that they can have the things and the life they want. 
  • To help in this endeavor, consider using one of the many available money management apps with your teenager. Many of these apps offer budgeting and spending tools along with financial education, saving opportunities and access to a debit or credit card. 

• Introducing and building credit: As adults, we often forget how important a credit history can be for young adults as they start navigating the world on their own. To help make the transition into adulthood easier, get a jump-start on building a good credit history for your teenagers by adding them as authorized users to your credit card. 
  • When done properly, this can teach them how to effectively manage short-term debt (assuming you ask them to pay for their charges). They’ll also start building a strong credit history, which makes renting an apartment or acquiring long-term debt easier. Plus, they may eventually be eligible for more favorable financing options.
  • Having a trusted payment method, like a secure credit card, can also help protect online purchases your child might make and prevent identify theft.  
  • Because the main account holder is ultimately responsible for any purchases of an authorized user, consider your children’s level of responsibility and maturity before adding them to your account.

You know your children best. Tailor these activities to your family’s needs.

Here are some games, books and apps you might find fun and helpful.

Games

• Payday, by Winning Moves
• Toss Up, by Patch Products
• The Game of Life, by Hasbro

Books

• How to turn $100 into $1,000,000, by James McKenna and Jeannine Glista with Matt Fontaine
• I Want More Pizza, by Steve Burkholder
• Better Than a Lemonade Stand!: Small Business Ideas for Kids, by Daryl Bernstein
• The Early Investor, by Michael Zisa
• Early Bird Gets the Bitcoin, by Andrew Courey (written when he was 12 years old)

Apps and links

Budgeting apps

• You Need a Budget
• Every Dollar

Banking and finance apps with budgeting features

• Greenlight
• FamZoo
• Go Henry

Gaming apps

• Visa Financial Football
• The Stock Market Game

To learn more about CIBC Private Wealth’s G2G Impact offering, contact your CIBC Private Wealth advisor or wealth strategist.

Caroline McKay is a senior wealth strategist with CIBC Private Wealth’s Boston office, and has 13 years of industry experience.