How to teach your teens Part 1

Now, at the beginning of any solid financial plan is an emergency savings account.

I started the conversation with my son on the topic of emergency savings rather than jumping straight into something more sophisticated because, frankly, he would have been lost.

Because you cannot build a solid financial future on a shaky foundation.

And the shakiest foundation of all is living without any financial cushion whatsoever.

I believe that one of the first things that children should be taught is to save and to save into different buckets or different accounts.

You'll have your spending account and your savings account or your spending bucket and your savings bucket for younger kids.

For my kids, they had a tithing bucket as well.

But I mentioned before how one of my IBC practitioner friends taught her daughter to add a third bucket of savings where those dollars were untouchable unless they were being used for something that would earn and grow her savings, which I think is a fabulous idea and wish I would have talked to her about it when my kids were younger and then use that idea myself.

So now her daughter is in her early 20s with a large savings account meant only for growing her savings, and she is using it to fund her own whole life policy that her mom had started for her and then turned over to her once she was a responsible young adult.

Such a great idea.

So most adults know they're supposed to have emergency savings, and most adults will tell you they don't have enough of it.

In fact, studies have shown that a significant portion of Americans couldn't cover an unexpected $1,000 expense without going into debt.

Terrible.

And for teenagers and young adults who are just starting out, the temptation is to think, well, I'll deal with that later.

I'm young.

Nothing bad is going to happen.

And I understand they have time on their side.

But the whole point of an emergency fund is that emergencies, by definition, are things you don't see coming.

You don't get to schedule them for a more convenient time.

So the very first conversation I had with my kids was on the topic of emergency savings.

Now, at the beginning of any solid financial plan is an emergency savings account.

I started the conversation with my son on the topic of emergency savings rather than jumping straight into something more sophisticated because, frankly, he would have been lost.

Because you cannot build a solid financial future on a shaky foundation.

And the shakiest foundation of all is living without any financial cushion whatsoever.

I believe that one of the first things that children should be taught is to save and to save into different buckets or different accounts.

You'll have your spending account and your savings account or your spending bucket and your savings bucket for younger kids.

For my kids, they had a tithing bucket as well.

But I mentioned before how one of my IBC practitioner friends taught her daughter to add a third bucket of savings where those dollars were untouchable unless they were being used for something that would earn and grow her savings, which I think is a fabulous idea and wish I would have talked to her about it when my kids were younger and then use that idea myself.

So now her daughter is in her early 20s with a large savings account meant only for growing her savings, and she is using it to fund her own whole life policy that her mom had started for her and then turned over to her once she was a responsible young adult.

Such a great idea.

So most adults know they're supposed to have emergency savings, and most adults will tell you they don't have enough of it.

In fact, studies have shown that a significant portion of Americans couldn't cover an unexpected $1,000 expense without going into debt.

Terrible.

And for teenagers and young adults who are just starting out, the temptation is to think, well, I'll deal with that later.

I'm young.

Nothing bad is going to happen.

And I understand they have time on their side.

But the whole point of an emergency fund is that emergencies, by definition, are things you don't see coming.

You don't get to schedule them for a more convenient time.

So the very first conversation I had with my kids was on the topic of emergency savings.