How Do I Teach My Teenager About Money?

One of the most important jobs we have as parents is to teach our children how to navigate the adult world. An important skill they’ll need to master is managing their money.

Starting while they’re young is a good plan but if you’ve missed that boat it’s not too late.

So how can we successfully teach our kids to manage money when they’re teenagers, still living at home, and dependent upon us for most of their monetary needs?

Some school districts, realizing the importance of educating young people about money, have begun offering personal finance classes in high school.

North Carolina recently became the twentieth state to require high schoolers to complete a course in economics and personal finance to graduate. Topics taught to teens include paying for college, using credit cards, and taking out a home mortgage.

Even if your state doesn’t require such a course in high school, however, there are ways you can teach your teenager how to manage their finances.

Teaching Your Teen About Money

Here are six essential money topics and tools to discuss and use with your teen to boost their financial literacy.

Budgeting

One of the fundamentals in personal finance is “spending less than you earn.” Since teenagers don’t usually have full-time jobs, and may not earn any money at all, how can we teach them how to manage their spending?

One way is to allow them to make all of their purchases out of a weekly or monthly allowance. That way, they’re forced to budget for the things they need and want.

You can ask them to pay for clothing, school lunches, car insurance, and gas (If they’re drivers), school supplies, and entertainment money. They’ll have to decide how much to spend in each financial category.

They’ll also need to make sure they don’t spend too much cash in one category and run out of money for another.

If you feel comfortable, share your budget with your teen. Be sure to go over all of the periodic or hidden expenses also included in the family budget.

You can explain the difference between gross and net pay. Plus, show them how much money comes out of your wages for taxes, health insurance, and retirement saving.

With teens, showing often works better than telling. So, giving your child space to make his own financial decisions or showing him your budget will be a more powerful teaching tool than hypothetical advice.

Allowance Cards

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