How to Teach Teenagers About Money

When it comes to raising kids, most parents either look forward to the teen years . . . or dread them. But no matter which side of the spectrum you’re on, the end goal is still the same: help them become successful contributors to society. But what does that even mean?

It means showing them the ropes when it comes to adulthood, things like getting up on time, taking a regular shower, and learning how to make a budget. Now’s the time to start teaching teens about money—how to earn it, save it and spend it wisely.

Personal Finance for Teens

Think of your teen as an adult in training. It’s your job (as the adult of the house) to teach your teen what they need to know for that moment you send them off to college, trade school or even their own apartment. But you don’t have to be a finance professor to teach your teen how to save money. You can show them by example. Remember: More is caught then taught. You’ll want to show them how to earn money, create a budget, give, save and spend wisely.

Earning Money

If you’re like most parents, you’ve probably been eagerly waiting for the day your kid is old enough to start helping around the house. You may have started out asking them to help you wash the dishes, sweep the floor, or feed the dog. But now that you’ve got a teenager in your house, you’re probably off-loading the big-item chores like mowing the lawn or taking out the trash (woo-hoo!).

Instead of giving them an allowance just for breathing, you might want to think about giving them a commission. Not only will this strip them of any entitlement, but it’ll also help them see the relationship between hard work and money earned. When they do their chores, they’ll earn a commission. And when they don’t, they’ll realize they’ve made what they earned—nothing.

Is your teen old enough for a real-life job? Even better. Working for someone else, earning a paycheck, and seeing Uncle Sam take a chunk of their hard-earned dollars will help teach your teen about money—quickly. And if they’re a self-starter, you might show them how to start their own small business with the Teen Entrepreneur Toolbox.

Setting Up Bank Accounts

Just like losing a tooth or learning to drive, setting up your teenager’s first bank account is a rite of passage. By now, they’ve probably earned some money and have outgrown that piggy bank they got for their first birthday. You know what that means—it’s time for a real bank account. You probably don’t want to connect it to your own in case they overdraft their account or their identity gets stolen. But you will want to be the signer on the account so you can see their spending behavior. Remember: This is a great opportunity to teach them how to reconcile their account, keep track of spending, and learn to save.

Giving

You simply can’t go wrong with giving, because that’s what God’s called us to do, right? Something changes in your spirit when you become a giver. You focus less on yourself and see the needs of others more. One of the best things you can do for your kids is teach them to appreciate and understand the power of giving before they go out on their own. Plus—it’s the most fun you can have with money.

When you show your teens the concept of giving at an early age, they’ll remember how good it felt and (hopefully) continue the pattern as they handle their own finances.

Saving and Spending

Teenagers saving money. You’re probably thinking those three words don’t even belong together. But if you want your teenager to grow up into an independent, responsible human, you’ll have to show them how. It starts with not giving them money for every bout of want-itis they go through. Teaching teens about money and how to spend money is also important. Just because they have money doesn’t mean they need to burn a hole through their pocket.

Teach them about having long-term savings goals. At this age, all they can probably talk about is getting a car. If they want one, they can pay for it. Work with them on creating a plan for their money: what they need to buy a car and what they need to save. Early exposure to goal setting helps to give them patience and vision, two things they’ll need in life.

How to Teach Budgeting to Teenagers

Sounds intimidating, right? We get it—but it doesn’t have to be! Incorporating some family budget meetings will help you show your teen how to make a regular budget each month before the next month begins.

Here’s the good news: It doesn’t have to be complicated. Have your teen do a zero-based budget. Show them how to list all of their expenses, setting aside money to give, save and spend—like we mentioned earlier. Once they’ve assigned every dollar a place and their budget equals zero, they’re done!

The key here is repetition. Make this a family rhythm and sit down with your teen to show them how to do a budget for a few months. Once they get the hang of it, your check-ins won’t be as time-consuming. Not only that but we’re guessing you’ll be amazed at how well they do.