A father sits with son reviewing finances on a tablet device

Talking to teens about retirement

Oct 20, 2020
Empower Insights

For many parents, talking to their teenagers about money is even more uncomfortable than the “birds and the bees” talk. But the truth is that as your children grow into adults, few things are as important as their relationship with money.

Teenagers live in an in-between world in which they’re old enough to earn their own money but not old enough to make all their own money-related decisions. They can grasp complex concepts like interest and debt, but it’s hard to really understand the gravity of financial choices until you have experienced them yourself.

On top of all this, your teen is probably about as interested in retirement as they are in Jimmy Buffett. But all great journeys start with the first step, so here are three ways to introduce your teen to fiscal realities and get them to think about their financial future.

Be open with them

Honest discussions about finances can help make abstract money matters more concrete. These conversations can be intimidating, but you don’t have to be an accountant to provide meaningful insights.

Sit down with your teen and write out your budget for one month. Let them physically see your plan: how your expenditures relate to your income and how much you’re able to save. This will give them a frank sense of how much things will cost once they’re in the driver’s seat.

Refrain from turning the conversation into a lecture. Your teen will appreciate being spoken to as though they are an adult, and simply engaging in this topic will help eliminate some taboos around money, making it easier for them to reach out for help when they need it.

A glass piggy bank sits on a table with teenage girl in background

Make it real

From here you can hit more complex topics, like interest. Pick something your teen would really like to have some day, like a sports car or an extravagant vacation. Help them research costs for the item, then show them how they could take out a loan to help pay for such an expense over time.

Work together on some different online interest calculators using realistic loan amounts, terms and interest rates for the desired item. Having a tangible goal in mind will give these numbers meaning and allow your teen to see the huge impact of interest, both in terms of cumulative cost and time.

Encourage your teen to get a part-time job

A part-time job will give your teen the opportunity to make a few bucks and teach them a myriad of valuable life skills.

Something as simple as mowing lawns or babysitting for a few hours a week can lay the groundwork for attributes that will come in handy throughout their lives — like being responsible, punctual and having solid interpersonal skills. But the most important thing they’ll learn is how much it takes to earn money — and how easy it is to spend it.

When they get paid, you may want to let them have financial independence, but make sure they’re still cognizant of their cash flow. A great way to do this is to open a checking account together and go over the bank statement each month. This will also provide perfect opportunities to discuss long-term financial goals and have more hands-on conversations about money.

This is the second part in a series of articles on talking to your children about finances. If you’re looking for beginning financial literacy concepts, click here. If you’re ready for a challenging financial activity you can do with your teen, click here.

Start saving for your teen's future with an Empower Investment account

Latest Empower Insights

A young woman on vacation taking a selfie photo of herself with tropical water and island in background
Jul 20, 2021
Empower Insights

Savings tips for your summer travels

Overall, nearly 70% of Americans are expected to pack their bags and travel to a domestic or international location this season. Follow these simple steps to get ready and save money on your upcoming trip.

Carefully consider the investment option’s objectives, risks, fees and expenses. Contact Empower Retirement for a prospectus, summary prospectus for SEC-registered products or disclosure document for unregistered products, if available, containing this information. Read each carefully before investing.

Securities offered and/or distributed by GWFS Equities, Inc., Member FINRA/SIPC. GWFS is an affiliate of Empower Retirement, LLC; Great-West Funds, Inc.; and registered investment advisers, Advised Assets Group, LLC and Personal Capital. This material is for informational purposes only and is not intended to provide investment, legal or tax recommendations or advice. 

IMPORTANT: The projections, or other information generated on the website by the investment analysis tool regarding the likelihood of various investment outcomes, are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. The results may vary with each use and over time.

Insurance products are issued by or offered through Great-West Life & Annuity Insurance Company, Corporate Headquarters: Greenwood Village, CO; or in New York, by Great-West Life & Annuity Insurance Company of New York, Home Office: New York, NY. Guarantees are subject to the terms and conditions of the contract and the claims-paying ability of the insurer.

The managed account service is part of the Empower Retirement Advisory Services suite of services offered by Advised Assets Group, LLC, a registered investment adviser.

The Empower Institute is a research group within Empower Retirement, LLC.

All features may not currently be available and are subject to change without notice. ©2021 Empower Retirement, LLC. All rights reserved.

Unless otherwise noted: Not a Deposit | Not FDIC Insured | Not Bank Guaranteed | Funds May Lose Value | Not Insured by Any Federal Government Agency.