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. That’s part of being a good dad or mom.
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 than taught. You’ll want to show them how to earn money, create a budget, give, save and spend wisely.
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.
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.
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 them how to spend money is also important. Just because they have money doesn’t mean they need to burn a hole through their pocket.
Use the best tools to teach your kids about money.
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.
Things Teens Waste Money On
Although musical tastes and fashion trends have changed over the years, teens’ spending habits haven’t. Just like we did, they still waste their money on whatever sounds good in the moment—like a 10-pack of tacos or that new Ariana Grande album.
These days, Gen Z teens are spending about $2,600 each year.1 Yikes. While it’s perfectly fine for young people to have fun with their money, teens are old enough to stop blowing every last dime on “stuff.” So, what are they spending their money on?
Here are 10 typical ways American teens waste money:
1. Fast Food and Fancy Coffee
No surprise here: Most teens are eating . . . constantly. In fact, food is the first thing teen boys spend their money on (and second for the ladies).2 They don’t bat an eye at paying $6 for a venti extra hot caramel macchiato, $10 for a spicy chicken sandwich meal or $2 for chips from the vending machine. If your teen is buying Chick-fil-A every day, they’re likely eating through a wad of cash.
2. Trendy Clothes, Shoes and Cosmetics
While it’s normal for young people to take pride in their style, remind them that those super cool outfits will go out of style in exactly five minutes (if they don’t fall apart first).
3. Smartphones and Apps
What would life be like without texting, Instagram and Facebook? Expensive smartphones are a status symbol these days. So are the cool apps that go along with them. News flash: Last year’s model makes calls just as well as this year’s—for much less.
4. School Dances
Getting ready for the big dance can be expensive. After renting a tux or buying a dress, getting a limo, and going out to dinner, school dances—ahem, prom—can really add up. Listen: Glittery shoes and limo rides aren’t worth that mound of debt . . . especially when college tuition is right around the corner.
5. Spring Break Trips
Even if you trust your teen in Mexico, is it a wise use of money? And how much are you, the parent, expected to chip in? Encourage your teen to use their vacation time to work a few extra hours and save up for a more lasting experience—like, say, a semester of college.
6. Cars and Accessories
Your brand-new teenage driver doesn’t need a brand-new car. So, unless you plan on passing down your wood-paneled station wagon, they’ll need to save up and shop around for a reliable make and model in their price range. With the leftover cash, they can upgrade their ride with shiny rims and leopard print seat covers.
7. Video Games and Consoles
It seems like new gaming consoles come out every time you turn around. And teens need the latest versions to compete with all of their friends (the only two who also have the system). Let’s not forget all the awesome games they’re paying for too—at $60 a pop! Have mercy.
8. Concert Tickets
Teens identify with music. It’s only natural that they’ll want to see their favorite bands live. But concert tickets can add up fast. So encourage your metalhead or indie chick to pick a few priority concerts and not blow all their money on mosh pits.
9. Expensive Dates
Whatever happened to just hanging out? Now it’s a $30 trip to the movies, followed by a $35 sit-down dinner for two, then $15 gourmet frozen yogurts. Oh, and there’s the gas money to get around town. Multiply that by a few weekends a month, and your son or daughter just went broke for someone they probably won’t be dating in two years (or two months).
10. One-Click Online Spending
Thanks to Amazon and iTunes, teens hardly know a world without one-click buying. It’s okay to order stuff online—sometimes it’s even cheaper—but the downside is that kids don’t feel the pain of using cash. Don’t let them click their way into an overdraft fee.
The teenage years are great practice for the adult years to come. So encourage your kids to budget responsibly while they still have some space to mess up.
Money Management for Teens
Like we mentioned earlier, more is caught then taught. So, while you’re teaching your teen about money, you’ll also be showing them by how you handle your family’s finances day to day.
One of the best things you could do is help them prepare for their future. Do they want to get their own place? Do they want to go to college? Help them start thinking about these things early on with the 7 Baby Steps.
These steps will help them prepare for emergencies, save for college, and even get a head start on investing. They may not understand it now, but don’t worry. They’ll thank you later—especially when they graduate with a debt-free degree.
The Next Steps for Teaching Your Teens
If you really want to set your teen up to win with money down the road, buy them our Foundations in Personal Finance homeschool course. Your high schooler will learn the basics of budgeting, saving, investing, having a successful career, and making smart choices with their money—it’s the personal finance curriculum you wish you’d had in school. To recap:
- Help your teens learn to earn by paying them a commission for household chores and projects.
- Set up bank accounts for them to store their earnings and savings and learn how to balance an account.
- Get rolling on budgeting so they can practice planning how much to save, spend and give.