10 Things Teens Should Know About Money

Teens and the recession

Today's teens appear to be relatively savvy about money, which isn't surprising given that they grew up just as the Great Recession was shaping the country's economic path. Many of them watched their parents struggle with lost jobs or savings that got battered by the stock market. But they also face the same money temptations as other generations of teens. These 10 money concepts can help teens make smarter financial choices.

Save early.

When it comes to squirreling money away for later, the current generation of teens seems to be on the right path. A 2014 survey of more than 1,000 14 to 24-year-olds by TD Ameritrade, a brokerage firm, found that 57 percent said saving money was "very important" to them, up from 50 percent in last year's survey. Nine in 10 respondents said they would save at least part of a $500 gift.

Talk with parents.

Even if parents don't feel like financial whizzes, they actually have a lot of useful knowledge to impart. Simply talking about saving and investing with parents can help pass on important lessons in sound financial habits. Even talking about financial mistakes, like not saving enough in an emergency fund, can help steer teens away from replicating those errors.

Embrace the stock market.

Like millennials, teens tend to be relatively conservative and avoid the stock market, perhaps because they saw their parents lose money in it during the Great Recession. But investing in the stock market is part of a healthy financial strategy for long-term savings, including retirement savings, and avoiding the stock market could hurt teens.

Avoid debt.

Even teens are at risk of building up credit card debt, which is usually costly. The TD Ameritrade survey found that on average, teens carry $749 in debt, up from $485 last year. That kind of debt level can take years for some to pay off, and it's also expensive, since fees and interest rates add to the total cost.

Protect privacy.

Privacy might not sound like a financial issue, but it is. That's because identity theft can wreak havoc on your financial life and end up costing you a lot money. It pays to get in the habit of guarding your Social Security number carefully, and only sharing it when absolutely necessary (that means not at the doctor's office). The same goes for credit card and banking information.

Know the difference between needs and wants.

This is a tough one for teens because they are surrounded by temptations, from pizza nights with friends to the latest fashion trends. Parents can help their teens distinguish between needs and wants by encouraging them to make two separate lists for each and allowing them to prioritize how to spend their money accordingly.

Focus on goals.

Writing out goals for both the short and long term can help guide spending decisions. For example, if a teen wants to have spending money on vacation over the summer, she might decide to skip the purchase of a new top now. Experts say making the goals as specific as possible can help teens grasp and plan for them.

Embrace mistakes.

While losing money is painful, sometimes it's the best way to learn. Watching a first stock purchase lose money or building up credit card debt after an unexpected expense are rites of passage along the path to a healthy financial life. Learning those lessons early can help teens avoid repeating them when they're older and have more at stake.

Be frugal.

Since shopping at thrift stores for vintage items is now considered "cool," high school students can spend less on their wardrobes without risking social alienation. The frugality trend extends to other areas, too -- more Americans of all ages are embracing a do-it-yourself culture that can keep costs down for food, clothing and even haircuts.

Be entrepreneurial.

Entrepreneurial experiences as a teen, even in a volunteer capacity, can help spark ambitions for business careers later in life. Teens can experiment by selling their artistic creations on Etsy (under parental supervision), hosting a lemonade stand or turning other interests into side businesses.