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Teenagers are in the unenviable position of being almost grown, but not old enough to do whatever they want.
No matter how much they test your nerves, push the boundaries, or make you wonder when an alien replaced your sweet little darling, your teenager is still a child who needs guidance.
While you can’t always control who their friends are or be with them 24/7, you can offer them financial advice that will put them on the right path to being financially responsible.
If you’re wondering “How can I tell my kid what to do with money when I’m so bad at controlling my own financial future?” take heart. Becoming financially responsible is a learning process. You and your teen can learn together.
Be a role model. Teach your kids about being fiscally responsible.
You can’t predict the future, but one day your child may be financially responsible for you.
5 Fiscal Tips for Teenagers
1. Teach Your Teen the Value of Work
If possible, allow your teenager to get a job. Working for pay gives your teen opportunities to earn money, manage money, and learn to be responsible. Additionally, they will have your support and guidance while they learn life’s lessons.
If your teen is unable to find a job at a store, restaurant, or other establishment, or they are not of legal age to work, there are alternatives. For example, your teenager can earn money by working for neighbors or family friends (e.g., mowing lawns, doing chores, tutoring, babysitting).
If you decide to pay your teen for doing work around your house, only pay them for doing extra work. Anything that is part of their regular household chores does not merit extra pay (e.g., making their bed is not a pay-worthy activity; it is something they should already be doing).
Teach your child that when they work, they get paid. When they don’t work, they don’t get paid.
Have you ever heard the saying “If you don’t work, you don’t eat?” Although you may still be able to provide some measure of support to your family, if you don’t work, your child doesn’t eat as often, as well, or as healthily as you would like.
Explain to your teen that you earn money to provide food and shelter for yourself and your family. Eventually, they will have similar responsibilities.
Let your child know that working hard isn’t only about money. Being able to provide for oneself increases self-confidence and feelings of self-worth.
The value of work is about self-esteem, self-management, and being able to provide life’s necessities.
2. Give Your Teen Ownership of Their Money
Let your teen gradually take ownership of their money. As your teen gets older, give them more control over their financial future.
Every teen matures at a different rate. Use your teen’s levels of maturity, responsibility, and decision making to gauge how much guidance your child needs when managing their money.
Of course, no matter your teen’s age or maturity level, you must stay involved in your child’s financial decisions, provide them with sound advice and wise guidance, and make sure they don’t spend their college fund.
One way to gradually hand over control is to let your teen open their own bank account.
Many banks offer no-fee savings accounts and debit accounts for children. As your child’s legal guardian, your name is also on the account.
You can open multiple accounts for your child (e.g., one account for long-term savings goals and one for everyday spending). If you decide to open a savings account or another type of interest-bearing account for your teen, talk to them about the benefits of accumulating compound interest. Teach your teen that they can earn interest on their money.
If possible, take your child to the bank and sit with them as the banker helps them open an account. If it is not possible to go to a bank, open the account online and let your child help you enter the necessary information.
Alternatives to bank accounts include money management apps for kids and debit cards for kids. Whatever method you decide (e.g., bank or app), the goal is to familiarize your teen with the process of opening an account and managing their money.
Let your teen put money they have earned into their account.
Earned money has intrinsic value. It is theirs. Let them take ownership of it.
3. Help Your Teen Track Their Credits and Debits
Being financially responsible means knowing how much money you have coming in, how much is going out, and where the money is going. In financial terms, these are credits, debits, and expense categories.
Teach your teen these three terms.
Credits are the money your teen receives. Credits include your teen’s paycheck, money from doing chores or helping neighbors, and monetary gifts for birthdays, graduations, and holidays.
Debits are anything your teen spends money on. Debits include meals, toys, clothing, and any expenditures your teen has.
Expense categories are labels describing how or where money is spent. Expense categories include food, clothing, and entertainment.
Although a spreadsheet or pencil and paper are fine for tracking small expenditures or infrequent transactions, encourage your teen to use an app or bank account to automatically track their expenditures. Make sure you have access to the app or account so you and your teen can discuss their earning and spending behavior.
4. Help Your Teen Set Manageable Goals
Help your teen set manageable earning, spending, and savings goals.
Does your teen have a savings goal? Are their credits steady and recurring or sporadic? Are they managing their money well or do they need additional guidance?
Tell your teen they have to earn money to buy what they want. They have to save to reach their goals. They have to set reasonable expectations for what they can buy and how much money they can spend.
Encourage your teen to think about how their behavior affects their long-term goals. Let them learn from their mistakes.
If your teen spends all of their money, let them know it is gone. The Bank of Mom or Dad is closed.
Your teen must learn to live within their means. Teach them that, with time, they can recover from financial mistakes.
Help them learn their limits by tracking their money, making mistakes, and setting manageable goals.
5. Be Your Teen’s Best Example
The best way to teach your teen about fiscal responsibility is for you yourself to be responsible. You are your teen’s best example of what it means to value work, own your money, track expenses, and set manageable goals.
If you are proud of your job, the lessons you’ve learned about work over the years, or your ability to provide for your family, let your teen know. Discuss your career path, your triumphs, and your struggles.
Tell your teen how you learned, or are learning, to take ownership of your money. Discuss how you manage your accounts and why you entrust your money to a particular financial institution.
When you shop, explain prices to your teen. Discuss why you purchased one item instead of another. Explain that your credits, debits, and expense categories are different from your teen's. Let them know that their expenditures will change over time.
Talk about your financial goals for yourself, your family, and your teen. Discuss your plans for the future. Let your teen know where you have been financially, where you are now, and where you aspire to go.
Be a role model. Let them know you are striving to be financially responsible.
Answer your teen’s questions, set a good example, and be honest about any financial mistakes you have made in the past.
Talk to your teen about money and what it takes to be financially responsible. If you don’t, your teen will think money is a taboo topic. They won’t talk to you when they have questions because you don’t talk to them.
Who do you want your child to go to when they have money questions – their friend, the local loan shark, or you?
Teach your teen what they need to know about money and being financially responsible. Let them see you making smart financial decisions.
Their knowledge of money matters will help them throughout their lives.
Who knows, someday their knowledge may help you too.
Become economically savvy. Read Economically Savvy: Your Personal Guide to Wealth and Financial Wellness.