Letting Life Teach Teenagers Financial Lessons

I dropped my firstborn off at college a few weeks ago. The day was full of pride, joy, sadness, laughter, tears and worry. A roller coaster of a day, but maybe not so different than the days we’ve all been through over the past 18 months or so. As we pulled our now empty car off campus, my husband and I wondered “will she thrive”? Have we truly done all we can do to prepare her for this level of independence? In the backseat, her sister was already making plans to take over her room.

Is she ready? Have we adequately prepared her? Did we give her room to fail?

High school is an incredibly impressionable and opportune time to shape beliefs and habits around money. As members of Generation Z often raised by “Bulldozer Parents,” high school students have a unique way of consuming information and are sometimes at a disadvantage with not being allowed to learn a life lesson the hard way. Born between 1995 and 2015, these students have never known a world without the internet. Expecting information at their fingertips is not due to impatience, but due to their reality. As parents, we often reinforce the immediate need for gratification by forging ahead well before our child to remove obstacles and ensure success. This “bulldozer style” of parenting can result in students that have rarely learned anything the hard way.

I admit to occasionally falling prey to this style of parenting, so I am consistently trying to check myself. And with two teenage girls, that can be hard—especially when it comes to money. Teenagers are expensive, so money is a hot topic at our house.

My daughter learned three invaluable lessons about money while in high school—how to fail with it, how to earn it, and how to budget it.

How To Fail

Remember the “Bulldozing Parent” reference? Allowing your child to fail or to experience a completely embarrassing moment is hard, but real-life experience is often the best teaching method. Add to that the fact that Gen Z-ers thrive in active, personal, hand-on learning environments,¹ and real-life lessons work really well.

This outside-of-the-classroom lesson started with me caving on my daughter’s desire for a debit card—quite frankly to make things easier for myself. As a requirement to obtaining this card, she had to:

• physically go to the bank;
• fill out all her own paperwork;
• engage in an actual live conversation with the personal banker;
• sign multiple documents;
• and go over the details of how a debit card works.

The process took well over an hour and her frustration with the mundane details of securing this bank card was more than obvious. In her mind, the entire process should have been done online. (Even post COVID, I’ve had her mask up to conduct her banking needs in person)

The initial lack of banking experience may be why she did not recall a very important detail during that first meeting—the moment where I declined to be the “overdraft” protection. My daughter did not bat an eye. Overdraft protection was of no interest, she just wanted that card. The thought of not having money on this debit card was not even a consideration. After all, debit cards always work—right?

The most memorable and unplanned learning moment from her high school years was getting turned down to due insufficient funds while shopping with friends. With each subsequent retelling of this story, her embarrassment and humiliation grew. My husband and I loved it! The shock of getting rejected while checking out was a lasting, painful memory and perfectly exemplifies why failure is a great way to learn. I could have easily been her safety net and overdraft protector, but now she does not ever use that card without looking at the mobile app to check the balance first.

How To Earn

As it turns out, that lesson in failure quickly turned into a discussion on income (or lack thereof). The fact that she needed to figure out a way to earn money to be able to use her debit card was apparently mind-blowing. Never mind that she had seen both parents leave for work every day for well over 15 years. But after several unsuccessful requests that we deposit money into her account, she picked up a few babysitting gigs and was back in business.

Then came the 16th birthday and the responsibility of a car. While her driving solo was a very scary thought, I was excited to be relieved of some of my chauffer duties. That is, until she had her first fender bender less than one week after obtaining that license.

She managed to rear end a friend while parking and thankfully no one was hurt. She assured me the damage was minimal and I assured her that repair work on fenders was expensive. In fact, she was shocked to learn that the repairs were going to cost $997. A number that really seemed to grow when I asked her how she planned to pay us back. With a bit of negotiations, we settled on a plan. Twenty weeks of mowing the lawn in the dead of summer. While $50 may seem high for mowing the lawn, we live on an acre and it is a very small push mower. She was averaging about $20 an hour and it was hard earned.

As a member of Generation Z, my daughter prefers active learning and wants to be engaged during the learning process. The lesson learned here? Paying off a debt is hard work, can take quite a bit of time, and quite a bit of determination. She now calculates how many hours it will take to pay for things prior to purchasing and often decides against spending.

Understanding the time involved in earning a dollar is not lost on this generation – they are described as financially conservative. According to a May 2020 report by The Center for Generational Kinetics, 43% work full-time, 44% have a part-time jobs, and they have long-term financial goals.²

How To Budget

To really round out the trifecta of financial life lessons while in high school, she decided to take economics. After all, it should be an easy “A” as my daughter was now a money genius. As it turns out, she is not alone in her confidence. An interesting pattern is emerging in how this demographic approaches their finances, as they have a strong desire to save, to work, and to earn their own keep.³

The beauty of a high school economics class is the “real life” family budget. Since this generation prefers class discussions and interactive classroom environments over traditional teaching methods, playing “house” is a great way to teach high school students. (Now, her Economics class was pre-COVID, so she did have in-person instruction. The impact of virtual learning is a very important topic for another day.)

Each student was assigned a spouse and given the rules of the game. As a team, they discussed:

• What type of job they would have and what income looks like after taxes and basic expenses;
• What type of car they would drive and the associated costs (think car insurance and gas);
• What size house they would own and the subsequent mortgage payment;
• Whether or not they were going to pay for their children's education;
• The importance of a savings account and methods to save for retirement.

This class was eye-opening for my daughter. She is now actively engaged in discussions about saving money and is full of questions about how retirement plans work.

My monologues around the value of a dollar and the importance of saving had clearly not been enough. Due to an active learning preference, high school students need to be allowed to “fail,” physically earn money, and build a detailed budget before they head off to college. We are hoping that we sent her off well prepared and ready for an entirely new array of learning experiences. Maybe I’ll have an update to share when she returns home for the holidays.