There is endless information about teaching kids about money. This type of financial education shouldn’t stop at a certain age, stage or level. It is important to continue to develop this knowledge as children grow to teen years and get closer to making their own financial decisions — like for college, living independently, marriage, etc — that could have long-term impact on their lives.
Teaching teens about money goes well beyond lecturing or pointing them to educational materials or online resources. In fact, it has to be done in practical steps that help them learn the consequences of their decisions and how money management, if done correctly, can help them achieve their goals.
These steps can include allowing them to make some of their own financial decisions or bringing them the table when family money discussions are made, if appropriate. Some simple steps that can help teens learn about money management include the following.
Get a debit or credit card
It may be hard to find a bank that will provide teens — especially on the younger end — credit cards. But parents can help their older student teens learn more about money management if they at least have a debit card or a secured credit card where they can track their expenses and learn to read bank statements.
Having banks cards also allows teens to learn about basic financial safety in terms of online shopping, spotting signs of fraud, learning about fees associated with overdrafts or late payments, etc. When they master all of these basic concepts early on in their lives, they can be more comfortable making bigger financial decisions later on in life, and avoiding unnecessary fees and charges.
Share money concerns
Although teens are still children and parents probably don’t and should not overshare money issues with them, it is important that they share at least the concerns that are relevant to them in a simple way. For example, be open about matters of affordability, lifestyle expenses, luxuries and the importance of living within ones’ means. This probably won’t be a popular conversation with a teenager, but the more clarity they get in simple, matter-of-fact terms about the family’s financial situation, the more likely they will be able to think beyond their immediate needs and wants.
Even when it is not a concern, help teens get an idea about how some decisions that are related to them are made. For example, if you’re saying “no” to a trip because of its costs, offer them some insights about how and why you can fit this cost into your budget. Alternatively, and in a more constructive way, offer them options for how they can earn the trip, if they work or give up some of their other cost-heavy activities.
When you share these issues and give children a choice, the decision is jointly made, which helps them see the underlying reasoning for a yes or a no. In addition, the exercise itself is a good practice for them to know how household budgets are handled.
Give room to experiment
Money management is some sort of learning on the job exercises. If you’re always hovering over your children — young or teens — and making their decisions for them, they will never learn. Let them make some wrong decisions — within reason and their budget. And the consequences should teach them to improve the next time.
These decisions could be something like how much they save off their allowance for a purchase, how they spend their savings or acting on an impulse to spend their savings. Whatever the situation, letting them live with a minor wrong financial move may be a better route than providing constant, close guidance. Of course, as a parent, you want to protect your children, but teaching them basic money management is a great life skill that will protect them on the long run.
Teen money management
— Involve them in decision making
— Let them manage their money
— Let them make minor mistakes
— R.O.
