Teaching Teens How to Manage Money

As a mother and step-mom to two teenagers, I know all too well how expensive teens can be. If we treat ourselves to a restaurant outing, our teens can easily outeat my husband and I. They’ve also grown up with easy access to social media which only fuels the need and want syndrome. Over the years, we’ve learned to say no and simply not give in to every request.

Perhaps our approach is the not the norm, but I find that our teens are more appreciative and work harder for the things they want. But how can we teach them to manage money and make wise choices as adults? I truly believe that we can help shape their future choices and the way they handle finances from a very young age. Here’s what we’re doing in our home:

Teaching Teens How to Manage Money

Don’t hide your failures.

Sharing our financial mistakes with our kids will enable them to see first-hand how the decisions we make can affect our future. In fact, I feel like it’s a great way to start dialogue and allow them to learn from our experience. My daughter is going to college next year, but will not finance her tuition because I’ve openly shared the effects of student loan debt. When I recently learned how much we were spending on groceries, I also shared it with my kids. I want them to understand that making wise financial decisions requires time and effort. It’s not easy, and even when we have good intentions, we will stumble at times.

Don’t give them what they want.

Unfortunately this is a huge problem with our upcoming generation. Kids as young as 10 own smartphones and pricey gizmos that I wouldn’t even purchase for myself. My husband and I have been very careful with the way we handle money and gifts for our teens. Although we are a bit more generous on their birthdays and Christmas, the rest of the year we only spend money on what they need. Instead of going into debt or dipping into your savings to buy them what they want, allow them to save for it themselves. It will help them learn the value of money as well as financial responsibility.

Allow them to make mistakes.

When my 17-year old daughter decided to spend most of her pay on restaurant outings and clothes, I didn’t say a word. I encouraged her to save, which she sort of did, but in the end she did what she wanted. I was a teen once, so I totally get it. She wanted to have fun and enjoy the fruits of her labor. But when the money ran out and her beloved cell phone stopped working, I didn’t come to her rescue. Why? Because I needed her to understand that in real life she won’t be able to blow her check on clothes or dining out. She’ll have bills to pay and mouths to feed, so she’ll have to make wiser choices with her paycheck. I much rather help her understand this concept now when it’s not seriously affecting her.

Set them up for financial success.

The first thing I did with my teen when she started working is open up a shared bank account. This enabled her to cash her checks and start her own personal savings. She was able to save $500 over the summer by automatically saving a small amount from each paycheck. It motivated her to continue saving and gave her a sense of responsibility. Aside from a bank account, teach your kids basic financial principles. Have them join you during a budget meeting and show them how to create one. Talk to them about the negative aspects of debt and credit cards. Explain what a credit score is and why it matters. Sadly, many teens are going to college with zero financial knowledge and making decisions that will affect them for a lifetime.

Do you talk to your teens about money management? What are some topics you focus on? I’d love to hear your tips and advice!