Inside: Basic Money Management Tips for Teens. Teach them the financial skills they will need early to make smart money choices.
I remember when I was a teen and just started to drive, my mom gave me a short list of items to pick up for her from the grocery store and then handed me a $20 bill. I truly thought it was not going to be enough to pay for some lettuce, a gallon of milk and some other small random item. She looked at me in that moment and realized that as a teenager I didn’t have a clue about money and she and my father had some work to do.
Most teens don’t really understand the value of a dollar. And although it would seem that teaching teens basic money management skills should be a mandatory class at every high school in the country – well, it rarely is unfortunately.
It’s great that we’re getting all these high school graduates who can do advanced calculus, but they don’t know how to set up a budget, what an average year of college tuition costs these days or how interest works if they decided to buy a car.
So, as parents, it really sits on our shoulders to make sure our teens develop the necessary skills to manage their money effectively. With inflation, the stagnation of wages and way too easy access to credit, it is has become even more important for teens to understand the value of money and how to make it work for them. If want to ensure they have financially secure futures, it’s never too late to start preparing them to make smart money choices.
Here are some useful tips and strategies for teaching your teens about money management.
Start Teaching Tweens and Teens About Money Early:
The earlier you start teaching your teens about money, the better. By starting early, you are giving them the time to understand and practice good money habits. It is recommended that you begin the conversation about money management as soon as your child starts receiving an allowance or starts earning money from part-time work.
If you need a little help, this is one of the most highly recommended books for parents and teens when it comes to teaching teens about fiscal literacy.
How To Money
Set Realistic Expectations About The Value of Money
It’s important to be realistic about the amount of money your teen has to work with. It’s not uncommon for teens to have unrealistic expectations about their spending habits, so it’s important to have an open and honest conversation about what their budget can accommodate.
This means they need to really know how much things cost, so don’t shy away from conversations with them about household expenses. Also, if you buy them things, let them know the cost. Not to guilt them, just to educate them. You might be surprised to discover that even on your dime, they become less likely to ask for unnecessary “wants” like that super pricey gourmet coffee when they begin to see how it adds up.
Use Visual AidsTo Teach Teens Financial Awareness:
Teenagers are visual learners and are more likely to retain information if they can see it. One way to teach your teen about money management is to use visual aids such as charts, graphs, or even a whiteboard to help them see how their money is being spent.
Videos can also be a great tool. Believe it or not there are some great Tik Tok influencers to follow that talk about money for young adults.
Top Ten Financial Influencers Teens Should Follow On Tik Tok
Also YouTube can be a great resource for engaging videos. Teens may be more willing to listen to their peers or “experts” then they are to Mom and Dad.
Encourage Teens To Save Money:
Encouraging your teen to save a portion of their money is a key aspect of money management. Teach them the importance of having a emergency fund and how to save for long-term goals such as a college education or a down payment on a car. Open a bank account for them if they don’t already have one and have them download the app on their phone. Show them how to deposit checks (yes, they still get checks, especially from Grandma and Grandpa) and then encourage them to set savings goals. The can keep track of how their money adds up on their banking app, which will really give them a sense of agency over their own money.
Teach Teens To Create A Basic Budget:
One of the most important aspects of money management is budgeting. Teach your teen how to create a budget and stick to it. Show them how to track their spending and adjust their budget as necessary.
A great basic app for teens is Left To Spend. There are more complicated ones out there that teens can use, but this is just really simple. Teens just basically set a spending limit and then subtract expenditures. A good way to get them started with budgeting.
Talk To Teens About Building Credit:
Credit is an important part of adult life and it’s important for teens to understand how it works. Teach your teen about the dangers of using credit recklessly and how to build a good credit score. There are several “credit cards” that are specifically geared towards teens where parents can monitor how they use it and what money is available. But it can be an introduction towards using credit. Greenlight is good place to start and the most established in the industry.
Also, just as a heads up, as soon as your kid turns 18 they will start to get credit card offers. For kids this age, new to handling money matters on their own, this can feel like free money. Too many responsible kids end up with credit card debt at too early an age, just because they don’t really understand how credit works or interest or how quickly they can damage their credit score and how long it takes to fix. The best way to start building their credit is to add them as a user on an already established credit card a parent is using and that the parent has access to monitor.
Teach Teens the Importance of Investing:
Investing is a critical part of money management. Teach your teen the importance of investing their money for the long term. Show them how to research different investment options and how to create a diversified portfolio.
Bumper is a great investment tool geared directly to teens. Teens can buy a piece of their favorite brands’ stock and learn more about investing, including effective techniques.
If they are willing to do some reading, the following book can be a great introduction to investing for teens and is from a reputable online site with educated contributors.
Discuss the Consequences of Poor Money Management:
It’s important to educate your teen about the consequences of poor money management. Teach them how to avoid overspending, how to avoid falling into debt, and how to avoid high interest rates on credit cards.If you’ve made mistakes with your own money management, don’t be embarrassed to share these experiences with them so they can learn from your mistakes.
Again, videos can also be helpful as teens tend to be more receptive to this medium. There are many YouTube Videos about the top money mistakes that people make.
Help Teens Understand Real-World Financial Examples:
Using real-world examples is an effective way to teach your teen about money management. For example, you can discuss recent news stories about financial fraud or the benefits of saving for retirement.
Board games are another way to teach tweens and teens real world financial examples. Monopoly, The Game of Life and even PayDay all provide real-world simulations to some extent. While not perfect, they can be a great way to open up conversations.
Encourage Your Teen To Handle Their Money Responsibly:
Encouraging your teen to take responsibility for their own finances is critical. One of the best ways you can do this is to involve them in family money matters early. Send them on the weekly grocery shopping trip with list and a budget. Make sure they understand what their activities cost. If you are planning a family vacation, have them purchase the tickets, book the hotel, keep track of what you spend on meals. This will help to teach them how to make their own financial decisions and how to handle their own money.
Teaching your teen about money management is an important aspect of preparing them for adulthood. By starting early, setting realistic expectations, using visual aids, encouraging savings, and discussing budgeting, credit, and investing, you can help your teen develop strong money management skills.
Additionally, by discussing the consequences of poor money management and using real-world examples, you can help your teen understand the importance of responsible money management.
Are you in the thick of raising your tweens and teens? You may like this book by Whitney Fleming, the co-owner of Parenting Teens & Tweens: Loving Hard When They’re Hard to Love: Essays about Raising Teens in Today’s Complex, Chaotic World.
Parenting Teens and Tweens is hard, but here are some popular posts other parents found helpful that just might make it a little easier.
Ten Important Teen Life Skills They Need To Master In Order To Thrive In Adulthood
50 Simple and Useful Life Skills for Teens You Can Teach Quickly
f9 Essential Soft Skills Every Teen Needs to Succeed in Today’s World
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