Teens and Money
As teenagers take on more responsibilities—part-time jobs, preparing for college—they’re also experiencing more financial freedom and the realities of managing money. You don’t need to cover all the financial bases at once. Talking to your teens about money is easiest if it’s an ongoing dialogue. Using day-to-day activities as ‘teachable moments” is one way to engage them in a conversation and give them a practical lesson in money management.
As a parent, by talking to your teens about money and finances you can help shape their attitudes about money and develop basic money management skills that they can use throughout their lives. Some of the money management basics to teach your teens, include:
- Establish financial goals. As a first step to financial freedom, help your teens think through and establish their own financial goals. Short-term goals could include setting aside money to cover everyday expenses and entertainment or saving toward a vacation with friends. Long-term financial goals might include planning to repay student loans or saving to buy a car.
- Develop a realistic budget. Once they’ve established financial goals, help them create a budget. Help them think through how much income they have (such as a part-time job, allowance, or babysitting pay) and how they have been spending that cash. Mapping out expenses and income will help show any gaps and will allow you to talk through spending priorities (wants vs. needs) and help them allocate their money properly, helping them learn how to keep control of their money and stay on track to meet financial goals.
- Prepare for the unexpected. As you’re working together to create a budget, be sure to talk about setting aside money for emergency situations or unexpected fees (like car problems or an unexpected school expense).
- The value of balancing your checkbook. This is a great habit to develop early and one of the easiest ways to keep track of your finances and stay within your budget each month.
- Save, save, save. While it might be challenging for young people to put aside money in savings, this is an important habit to get into. Consider helping your teen set up a savings account and having deposits automatically transferred into the account on a regular basis (such as monthly, bi-monthly, or even weekly) to ensure that money goes directly to savings.
- Pay on time. Help your teen understand that paying bills on time is an important step toward establishing a good credit history. You might consider working together to set up online bill payment options for recurring bills.
- Be smart about credit. Explain the importance of a good credit score and the importance of establishing a good credit history. Look for ways to begin to establish a good credit history. If you decide that applying for a credit card or loan is a good start, remember that as the parent, you’ll likely be co-signer so it’s important that you discuss the value of credit and using it responsibly.
Resources for Parents and Families
Money as You Grow offers 20 essential, age-appropriate financial lessons with corresponding activities that kids need to know as they grow. Written in down-to-earth language for children and their families, this resource helps to equip kids with the knowledge they need to live fiscally fit lives.Money As You Grow
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