As the mom of almost three teenagers at the moment, teaching teens about money is a concept that takes up a lot of my current life.
Am I doing the right things? Will they be able to manage their finances on their own? How do I ensure they have a responsible outlook about money without being scared of tackling their bank accounts head-on?
The cost of living has increased more than ever in today’s modern world, so it’s very important that as parents, we focus on providing our teens with a solid financial foundation. Navigating teaching teens about money can be tricky, but fortunately, there are much smarter people than I out there who have some advice about how to make it work.
I admit that I’m a bit of a newbie in this area as well, so these tips are as much for me as they are for you. We’re in this together!
So whether you’re a parent of a teen or just looking to be prepared to enter the teen years, here are some tips for teaching teens about money.
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Help Your Teen Open a Bank Account
Online and mobile banking is obviously a part of nearly every adult’s life, but when my teenager got her first job, I took her to a physical bank to open her first account. I want her to fully be comfortable with online banking too, but it felt more like an educational experience to go to a physical location to open the account and learn the basics.
Opening the account in person also helped me teach other important skills, such as talking to an adult, filling out the paperwork, and describing services she wanted, such as mobile deposit and a debit card.
Of course, not every teen or family needs (or has access) to an in-person bank, so a fully online bank account works as well. Just be sure to let your teen take the lead so it’s a learning experience to open the account. Also, check with your bank, but many have rules about a minimum age for a teenager to open an account; ours was age 16.
Encourage Them To Work
Even if they don’t get a demanding job, it can be helpful for a teen to get a taste of the working world. Teens with busy schedules already, such as those in activities and sports, may not be able to have a super strict schedule, but even an occasional job can help them learn the basics such as:
- Having a schedule
- Tracking work hours
- Filling out financial paperwork
- Getting payments
- Seeing how much taxes come out of a paycheck
- Depositing a paycheck
You may not even have to do a lot of extra work when it comes to teaching teens about money once an outside job is set in place – the logistics of managing a job alone will teach your teen a lot without you.
Hire Your Teen Around the House
If they don’t have a “real” job, could you introduce some paid work at home as a strategy for teaching teens about money? Some ideas for paid work at home could include:
- Babysitting younger siblings
- House chores, like cleaning bathrooms, dusting, or spring cleanup
- Cleaning the car
- Helping with small jobs, such as repairs or moving furniture
I personally introduced a paid allowance to all of my kids, including the teenagers, for chores I want done regularly, but I don’t enforce it. A weekly payment is available for all kids who clean a bathroom, with additional payment available for “extra” work, such as the guest bathroom, cleaning my car, or other odd jobs.
So far, this strategy has worked, and even though they don’t take advantage of the payment every week, I’ve noticed that as soon as the teens want to do something or buy a treat like Starbucks, they race to pick up that cash. It’s a win-win in my book.
Set a Budget
Once they have some money (or even if they don’t), have your teen write out a budget. This could be a real budget for some of their expenses, such as streaming services, gas, car insurance, or even “fun” purchases like makeup or fast food, or a more theoretical budget based on household expenses so they can get a feel for it.
I learned the hard way that throwing a big budget at teenagers probably will make them overwhelmed, so it won’t be helpful. Instead, focus on starting small with something they can control. For instance, you could set a Starbucks budget for the month, or help them set a budget to save for a bigger purchase they want.
Introduce Investing
There’s no time like the present to invest, right? It’s never too early to teach teens the concept of investing, and there are many resources, like investing apps and even games, that can help you both get started.
Some apps even combine bank accounts, savings, and investing into one, so you can get a very well-rounded financial education for your teen.
Don't Fear the Credit Card
As USAA Federal Savings Bank explains, there is no reason to fear introducing a teenager to a credit card. A credit card can be an important tool to teach teens about managing money and setting a budget, as well as start building credit.
Teenagers can’t apply for a credit card until they’re 18 and will have to prove they can repay their credit card until age 21. But if you’d like to introduce your teen to the concept, you can add them as an authorized user to your credit card. Even before they’re 18, being an authorized user and using the card responsibly can help build their credit history, so it could be a benefit to them down the road.
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Hand Over Grocery Shopping for the Week
Want to give your teen a crash course in real-life money management? Hand over the reins for a week of grocery shopping! Have your teen make meal plans, write a grocery list, and shop for groceries with a budget.
There is nothing like seeing real prices to help them learn exactly what it means to put your money where your mouth is. (Side note: I have done this several times, and each time, my teens have fully panicked and tried to convince themselves they were fine just eating saltine crackers, so be prepared. You might need to set some ground rules that they have to be realistic meals.)
Make Them Pay
I don’t ominously mean this, although it does sound a tad ominous. Instead, I mean it can be helpful to have your kids get in the habit of what it feels like to part with their cold, hard cash.
There is a big difference between buying something with mom or dad’s money and parting with their own money to pay for something they want. It’s a great idea to do this with kids even before their teen years, but if you haven’t yet, take your teen shopping. You could set some rules, like a pre-set budget, or let them decide how much of their own money they want to spend.
Either way, a strategy for teaching teens about money is to have them do it all: Choose the store, figure out the price, calculate tax, and physically pay for the item. It helps reinforce the reality of spending money and lets them feel ownership over the financial process.
