Teenagers will tell you that they know everything.

Everything except revolving credit card debt, skyrocketing bills, and applying for loans. These are the kinds of things that shouldn’t be learned by trial and error.

It’s important to have open and honest conversations about money with your children.

Start by giving them a strong foundation that they can use in any situation by helping them to open a checking and savings account in their name. It’s certainly not a bad idea to instill the notion that money doesn’t grow on trees and comes from hard work. It gives them a context in which to understand why parents must work long hours to support the family.

Whatever we teach children about money — actively or passively — we’re teaching them skills they are going to use in the real world — actively or passively.

With most people using credit cards and debit cards to pay for things, some teenagers don’t have any concept of money. Making change at the cash register is almost a thing of the past, and with it goes the tangible aspect of currency.

Getting a grasp on their personal finances at an early age is very beneficial in the long run. It instills a deeper appreciation of money and financial literacy. Teens must learn how to make their money work for them with things like CDs, money market accounts, and old-fashioned, interest-bearing savings accounts — things that will generate returns on their investments.

Many 16-year-olds are eager to get that first job. Not only can they use their new checking account to deposit their pay, but they can also have a percentage that is automatically deposited into savings. This can be done when they fill out their direct deposit information or in transfers between their bank accounts. At that age, 75% of income could be swept into savings.

Some other ideas include:

  • Empowering them to use their money to achieve long-term goals, like college.
  • Teaching them about the joy of monthly recurring charges by having them pay for their own gaming subscriptions.
  • Teaching them how to use Quicken, Mint, YNAB, or other accounting apps.
  • Encouraging the creation of a “rainy day” fund or another savings goal.
  • Think of them as adults in training.

They want to be independent — so play into that!

It is recommended that all bank account holders reconcile, or balance, everything that passes through their accounts at least once a month. There are tremendous benefits when young people form a financial relationship early.

Starting a bank account early in a teenager’s financial journey is the first step to nurturing lifelong habits that help secure a strong financial future.

We need to stop failing our kids and start teaching them about money and credit. And we need to shield our kids from our bad habits. Show them, by example, how you handle your family’s daily money management. When we start financial education early, we can raise good savers, investors, and hopefully philanthropists. They will thank you later.

Judy Heft is the CEO/founder of Judith Heft & Associates, a financial and lifestyle concierge celebrating 26 years in business helping people stay financially organized. She is a certified money coach and the author of “How to Be Smart, Successful and Organized with Your Money.” For more information, visit www.judithheft.com.

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