by Brenda Campbell, president and CEO, Make A Difference – Wisconsin

Financial literacy is the easy part. Behavioral change is what matters most. That’s what led me to do some research on the psychology of being a teenager. But I’m getting ahead of myself …

In the last few years, there has been a buzz around the term financial literacy. Why not? It feels like an obviously good idea and something that adults can easily see that everyone needs, regardless of age.

Aside from some of the loaded features of a term like “literacy,” there is an underlying problem with missing the bigger picture. Of course we want people to have the basics of personal finance. That’s where it all starts. However, for lasting empowerment and capability, there must be action. For us, it means spending time with teens to work through the steps to open bank accounts, set goals, develop written budgets and learn from their mistakes.

Add it up and we’re talking about behavioral change. And to make that change a reality for teens, we have to meet them where they’re at, with empathy and encouragement. These are the types of skills and guidance that adults often overlook when working with youth. So I want to take a moment to look at two of the factors related to teen behaviors as we help direct them toward smart actions when it comes to managing money.

For one, teens live in “the now”. They have a hard time seeing far out – harder than adults – and, as a result, don’t usually see the payoff in establishing long-term habits. (Teens like Mariya, at left, one of our Money Coach students through Teens Grow Greens. As she told her volunteer money mentor, Rebecca Murray, in the foreground, it can be tough to plan for long-term saving when she sees her classmates at Nicolet H.S. flaunting the latest iPhone.)

As summarized by Austin, Texas family psychologist Carl E. Pickhardt, Ph.D.:

“Focused so much on the moment, many teenagers fail to understand the law of formative effect: how we become accustomed to acting in the present is how we are likely to act in the future.“

In that context, concepts like interest and debt can feel like just that – concepts. And the longer it takes for those types of financial concepts to take hold in their lives, the further behind they are at building savings and accumulating wealth.

A second factor – like the rest of the body, the teenage brain is developing for adulthood. As part of that development, fear and anxiety are revved up, calm reasoning can lag, and the part of the brain identified as the “reward center” matures quicker than other areas, which can push risky behaviors.

We hear these little rewards every year from teens who start their first budgets and realize they’re spending a lot on fast food or convenience store snacks. Recognition of that spending is a hint at financial literacy. Action to change this habit, or spend and save toward it, equates to a robust behavior. And that’s the type of knowledge and habit development that can change a person’s life.

Socially and even politically, there is more traction than ever in our home state of Wisconsin around financial literacy. We are all for it. Frankly, I’d love to see the day when organizations like ours aren’t needed, and that it’s clear that every teen has the confidence and capability to determine their own financial future. We know from our 11 years of work – including tracking key metrics like banking, saving and budgets – that establishing behaviors as teens provides strong indication of financial stability and success into adulthood.

To get to that point, it will take much more than the basics. We must all ensure that we’re considering the finer points of what it means to be a teenager today – and how it’s key for them to form good behaviors for tomorrow.