Teaching Financial Responsibility: A Guide for Parents & Grandparents
By: Anders Velischek, CFP® & Garrett Wells, CFP®
As the new school year approaches, parents and grandparents often look for ways to support their teens and young adults beyond the classroom. One crucial aspect is fostering good financial habits.
With the increasing costs of education, living expenses, and the complexities of managing money, equipping your teen with solid financial knowledge is more important than ever. This guide aims to help you provide the necessary tools and guidance to set your children up for financial success in their immediate and long-term future.
Understanding Your Teen's Financial Habits
Before introducing financial lessons, it's important to evaluate your child's financial understanding and habits. Do they struggle with basic concepts like saving or budgeting or are they adept at managing their finances?
This assessment helps tailor your approach to a financial conversation. For teens who tend to overspend, focus on budgeting and saving techniques. Conversely, if your teen is financially responsible, consider discussing more advanced topics such as credit management and investing. Use the accompanying image to gauge where your child stands in their financial literacy journey. Most teens and young adults will fall into one of the first two steps.
Setting Up for Success: Budgeting
Helping your teen develop a budget is an essential part of financial education. This can start with covering their cost of living, clothing, or entertainment and gradually including them in more financial responsibilities as they grow older. Consider the following:
- Encourage your teen to gain valuable work experience and manage discretionary expenses through an internship or part-time job, allowing them to earn their own spending money while you cover essential costs.
- Provide incentives such as matching their earnings with Roth IRA contributions. Note that students must have earned income to contribute to a retirement account.
- Motivate responsible financial behavior by rewarding good grades, sticking to a budget, and more with additional spending money.
If your teen is working during the school year or over the summer, encourage them to fund a retirement account to empower them with good saving and investing habits early on.
Tips for Good Financial Habits: Secure credit cards
Discussing the importance of good credit, how to get started, and the consequences of mismanaging credit early on is a great lesson for your teen. It's highly recommended that they apply for their own credit card to start building their credit history, rather than just being an authorized user on someone else's card. This credit history will help them when applying for their first apartment, mortgage, or buying or leasing a car.
If you feel it’s too early for them to get a traditional credit card, a secure credit card can be a practical step for building credit. For example, a card with a $1,000 spending limit backed by a savings account with $1,000 in it can help build credit without the risk of overspending. Setting reasonable spending limits and monitoring their spending can also guide them toward responsible usage.
Financial Education as Part of Simon Quick Services
Did you know that at Simon Quick, we offer financial education as part of our service? Our Financial Mentorship Program (FMP) is designed to provide your children with a wide range of knowledge and financial skills to get them start managing their finances effectively. This program offers resources like an introduction to retirement planning and contributions, helping your teen understand the importance of good credit and financial responsibility.
Equipping your teen with financial knowledge is one of the best gifts you can give them. It not only helps them manage their money better but also prepares them for a financially responsible future. As they head back to school, use this opportunity to instill good financial habits that will last them a lifetime.
For more information on how Simon Quick can support your teen’s financial education, you can take a look at our Financial Education and Mentorship Program or reach out to us by email or phone: info@simonquickadvisors.com, 973-525-1000. Together, let's set the foundation for your children's financial success.
Anders Velischek, CFP®
Vice President
Mr. Velischek joined Simon Quick in July of 2016. As a Vice President on the client advisory team, he provides financial planning advice for high-net-worth individuals and families. Additionally, Mr. Velischek works with a number of endowments and foundations, guiding them on investment policy decisions and investment implementation. Prior to joining the Client Advisory team Mr. Velischek spent six months in the Simon Quick Analyst Training Program.
Mr. Velischek graduated from Bucknell University with a B.S.B.A in Accounting and Financial Management. At Bucknell, he was a computer technician, a Residential Adviser, a Peer Adviser of the Chi Phi Fraternity, and a teaching assistant for Management 101. Mr. Velischek was also an analyst in Bucknell’s Student Managed Investment Fund where he actively managed over $1.5 million of the university endowment. Mr. Velischek completed the Financial Planning Certificate Program at Fairleigh Dickinson University in September 2019 and became a CERTIFIED FINANCIAL PLANNER™ practitioner in December 2019.
Garrett Wells, CFP®
Vice President
Mr. Wells joined Simon Quick in December of 2017. He is currently a vice president on the client advisory team. He is responsible for supporting the Partners and Client Advisors in assisting with financial planning for clients, implementing investment plans, preparing investment performance reports, and coordinating client communications. Mr. Wells is a member of the Hiring Committee, where he helps to identify and interview new talent for the firm. Garrett completed the Financial Planning Certificate Program at Fairleigh Dickinson University and became a CERTIFIED FINANCIAL PLANNER™ practitioner in October 2020.
Prior to joining the firm, Garrett worked as a consultant for First Derivatives focusing on Regulatory Reform for investment banks. There he gained experience in the implementation of financial regulation across the front, middle, and back offices of large banks.
Garrett graduated with High Honors from the Stevens Institute of Technology in May of 2017 with a B.S. in Business and Technology, concentrating in Finance and Information Systems. While at Stevens, Garrett was a member of the varsity baseball team and he currently is a volunteer assistant coach. Mr. Wells is originally from Manhattan Beach, California.
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