Though my mother and I have very different parenting styles, one thing I learned from her is the importance of learning to manage money. From my mom, I learned a lot about how to teach teens about money. By teaching your kids about money when they are teenagers, you set them up to be successful later in life.
How to Teach Teens About Money
To learn where their money goes, they need to start tracking it. Haven’t you ever wondered where all of YOUR paycheck went? You might even benefit from this exercise if you aren’t currently keeping track.
Buy a simple notebook for the whole family to share and have everyone write down what they spend their money on. Even if it’s just a pack of gum. By having everyone participate in this activity, you increase the likelihood of your teenager paying attention and joining in.
Write down everything you spend your money on and what it was for. You can collect all the receipts for things like groceries to see an itemized list of what was purchased.
Review the notebook and receipts together and mark any items you each feel was unnecessary or extra. Calculate how much could have been saved by not purchasing those items.
To help drive home this point, maybe add a few extra items, such as coffee, to see if your teen points them out as extra. They might not realize the costs of buying coffee out five times a week and believe it’s just “something you do.”
Of course, the first way for them to start earning money is through getting an allowance. Try to limit the amount you give them each time in order for them to learn how to save for big things they are interested in. They will begin to respect the money they do ear a lot more than if they were able to spend it on expensive things more often.
Getting a bank account for teens when they turn 16 years old is another way to teach them financial literacy. If you have been keeping track in your notebook, this should just be an extension of what they have been learning. Now they can learn to balance how much they are getting and how much they are spending.
Get a debit card for your teen, but don’t allow Overdraft payments to occur on the account. If you feel uncomfortable getting them a checking account now, try getting a prepaid credit card that can be used the same way as the debit card.
Of course, we want to buy our kids nice things, but we also need to teach them how to be responsible. They can benefit far more learning about money and credit.
Once they have a job, allow them to start buying the extra things. For example, when shopping for clothes, pay for the clothing you anticipated getting and if they want something extra, they can cover it. They will appreciate the expensive things when they have to work for it.
If you choose to help them buy a big ticket item like a car, match them dollar for dollar on the purchase and have them be responsible for gas and extras. If you paid for the gas all the time, they wouldn’t learn to conserve it and could potentially abuse the privilege.
This was not meant to be an exhaustive list of ways to teach good money management for teens, but merely a stepping off point. However, you choose to help your teenager learn about budgeting their money will surely make them successful adults.
If you found these tips to teach teens about money helpful, you might be interested in these other posts related to kids and money.