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Dream Again

Help your teen to financial independence

Ways to help your children become financially savvy before they leave home.

Nearly 60 percent of parents today, or in the past have provided financial support to their adult children.[1] Setting the groundwork for financial independence before your teens leave home can help them prepare for financial realities after college.

"We've found that parents have the greatest influence over the behaviors their kids develop around money — more than education or the experience of managing their own incomes," says Paul Golden, spokesman for the National Endowment for Financial Education.

Golden offered a few strategies for parents looking to instill some financial savvy in their teens:

Walk the walk.

Modeling financial responsibility is one of the most effective ways to teach it.

Amy Edelman of Montclair, N.J., recognized this approach early on while raising her two daughters, the eldest of whom is a college freshman this fall. Edelman talked with her girls about the importance of saving from the time they were young. She encouraged them to get jobs and showed them how to shop sales.

"I think it's important," Edelman says. "They need to learn not to spend more than they have. That's the way I was raised as well."

Help them practice.

As you explain the importance of saving and not spending too much, give your teens the chance to put this advice to work. Golden recommends providing an allowance — perhaps in exchange for chores — or encouraging your teens to earn their own money from a job.

When Edelman's daughters were younger, she encouraged them to divide their money into three envelopes:

  1. Saving
  2. Spending
  3. Charity

The message stuck. "My daughters are huge savers," she says. It doesn't matter how much your children set aside as long as they get into the habit of saving.

Budget together.

"If you haven't developed a household budget, now is a good time to do so," Golden says. You don't need to share every financial detail with your teens, but be candid about how you set priorities — for example, forgoing certain purchases so you can save for retirement. Then help them create their own budgets. Our online budget calculator can help make the process easier.

Open financial accounts.

Opening starter savings and checking accounts for your teens can teach them how to responsibly use basic financial resources. Research accounts that offer the best services, go over the fine print together with your children and help them monitor their financial activities.

Give your teens a head start. Teach them financial responsibility now, and give them the information they'll need once they're on their own.

Learn more.

Find more tips for talking with your teens about money.


[1] This survey was conducted online within the U.S. by Harris Interactive on behalf of NEFE from May 10-12, 2011, among 683 adults ages 18-39 who are not students, and 391 parents of children ages 18-39 who are not students.

* Retirement professionals are sales representatives of the members of the Principal Financial Group®. They do not represent, offer, or compare products and services of other financial services organizations.

Insurance products and plan administrative services are provided by Principal Life Insurance Company. Securities are offered through Princor Financial Services Corporation, 1-800-547-7754, Member SIPC and/or independent broker dealers. Securities sold by a Princor® Registered Representative are offered through Princor. Princor and Principal Life are members of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.

While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that none of the member companies of The Principal are rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.


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