7 Tips for Educating Your Teenage Kids on Smart Money Management

Published on Jun 26, 2014 02:07 pm

Teaching teenagers about smart money management can be a bit more of a challenge than dealing with younger kids. There are more outside influences at work on them, namely the Internet and their circles of friends, and of course there’s that age-old matter of youthful rebellion to deal with. If you haven’t yet taught your kids how to organize a financial plan, you’re going to want to get going today. As they become more independent, head off to college, and eventually establish their own lives, they’re going to need a solid education to inform them. Here’s how to do it.

1. Show Them How to Save Money
Showing your kids how to spend money wisely can be very effective, especially if they’ve never done it before. If they don’t already have a savings account, establish one. Encourage them to portion out things like birthday cash gifts and holiday checks – some for spending, some for saving, and even some for charitable giving when they’re in a position to do so. And use your own experiences as examples. Whenever you save a good deal of money – perhaps after a mortgage refinance, or when you’re finished paying off your car – show them, and they can learn the value of discipline and prudent money management in action.

2. Help Them Find Work
Teenagers should be encouraged to start earning their own money as soon as possible, and they don’t necessarily have to wait until they’re of legal working age. Families are always looking for babysitters, and if your teenagers have particular talents, such as home improvement, gardening, or arts and crafts, encourage them to start their own business. If your teens want more traditional jobs, help them create resumes. Even if they have no work experience, this can still set them apart from the competition and show employers that they’re serious about working. Their resumes should highlight their interests, personal strengths, and educational achievements.

3. Provide Examples of Your Financial Mistakes
If you’ve done a poor job managing your own credit cards, break out one of your statements to show your kids the true impact of significant credit card debt on a person’s life. If they see a monthly charge of a few hundred dollars, you might be able to ward off this very bad financial habit early on.

4. Skip the Credit Card
The best way to avoid credit card debt, of course, is simply not to have one. Kids under 18 cannot own a credit card without a cosigner. Give them a prepaid debit card instead. This takes temptation out of their hands and teaches them the value of self-discipline.

5. Assist Them With Setting Savings Goals
Even teenagers should be educated on the importance of saving for retirement at an early age. Use an online calculator to show your teens the value of investing some of their money for retirement now. There are plenty of investment vehicles, however, which can provide an excellent starting point.

6. Institute a Flexible Allowance
Instead of giving your teens money “just because,” tie in their allowances with projects and responsibilities. If they know that the harder they work the more they can earn, you’re instilling a solid work ethic and showing them the mechanics of a very basic economic fundamental. Come up with an extensive list of projects along with monetary amounts for each one and consider adding bonuses for achieving good grades in school, as well.

7. Use Tough Love
Tough love works with finance, too. If your teens make mistakes, do not provide a quick fix by giving them money or paying off a bill on your own. Going a month with no entertainment because a bad choice was made can certainly help any lesson sink in.

Teaching your teenagers about money and finances can have long-term implications for you, as well. Children with good financial heads on their shoulders are much less likely to have to move back in with you post-graduation and are also less likely to depend on you when those important life moments come along – buying a house, purchasing a car, and having kids of their own. By taking the time to educate them now, you free up your later life knowing that your kids are smart enough to survive out there on their own.

What tips do you have for teaching teenagers about smart money management?


This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

Published by permission from ConsumerInfo.com, Inc.  © 2014 ConsumerInfo.com, Inc.  All rights reserved.

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