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Teenage Money Management Tips

A Parents’ Guide to Teaching Teens About Money

As parents, we are responsible for teaching our children how to become independent responsible adults. An important aspect of this is know how to teach teenagers about money. They need to understand how it’s earned, what things cost, and why you should save.

Money Management For Teens

money management for teenagers

The best way to teach kids about money is for them to learn by example. Talk to them about what things cost and why you can or cannot buy certain things.

Teach Them What Things Cost

Send them to the store to buy things on a list. You can ask them beforehand to think what everything would cost together and then they can see if they guessed correctly or were way off.

Give them insight into the family budget. Show them what your mortgage is, what you pay for insurance, school fees, and what you need for groceries (and savings if possible).

Teach Them How To Save

A great way to teach them how to budget is once they’re earning their own money, to give them several ‘buckets’ to split their earnings into.

They can put some into expenses, some into personal spending, some into savings.

Give Them An Allowance

We’ve always given our children a small but consistent allowance.

They can choose to spend it or save it. In the beginning, they would spend it on silly toys and tuckshop.

Our eldest son wanted to get a tablet, so we said that if he saved up half of the money for it, then we would pay the other half.

It took him 2 years, but he eventually got his tablet.

There were several lessons learned from this:

  • Our son felt a great sense of achievement and pride in buying his own tablet.
  • He learned delayed gratification i.e. he couldn’t get it immediately, but really enjoyed the feeling of finally getting it.
  • Our youngest son noticed that you could buy one really nice thing, and use it a lot, versus buying sweets and toys that you don’t really play with again. He too started saving his allowance to buy something bigger and better later on.

Open A Bank Account For Them

Our son has his own bank account, which is a savings account, but he can withdraw from it when he needs some money.

It’s up to you to decide if they should have a credit card, but we decided that their basic needs are met by us.

They don’t need anything else. Whatever else they want is not a need, so they should rather save up for it than go into debt.

Explain Depreciation

Explain to your teens the difference between a depreciating vs an appreciating asset.

For example, when you buy a new car, as soon as you drive it out of the car dealership, it depreciates in value. As your car gets older, the less valuable it will be in real dollar terms.

In contrast, assets like property are usually considered appreciating because (unless there is a housing crash) the value of your home should go up over time, rather than decrease in value.

Teach Them Why Debt Has Negative Consequences

Debt management is not just about paying back what you’ve loaned, but also trying to avoid debt in the first place.

If your child is lucky enough to go to college, you might have been saving for their college fund.

They should understand how long it took to save up for this and what you had to forego to be able to set this money aside every month.

Make sure they understand that paying back a loan comes with interest. Show them how much more they have to pay the longer they take to pay back a loan.

Final Thoughts

Teaching your teenager how to manage their money is an ongoing discussion.

Every day there will be opportunities to discuss costs and why it’s important to save.

When your car goes in for a service, take them to the garage with you, so that they can hear you discussing the costs of replacing the brake pads.

Show them that similar items might cost more in different shops, and why it’s beneficial to shop around to find good deals.

Sometimes you might have to forego buying something because you just don’t have enough money for it right now. Show your teen that it’s okay. Many things we think are needs are actually wants, and we can get by without them.

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Written By

As a mom of two boys, I've been through the many ups and downs that parenting brings. However, I absolutely love reading and learning about better ways to communicate with my teens. I try to understand what they might be going through in their various stages of development. Communication, understanding, kindness, respect, and leading with love can help us maintain a positive bond with our children, from toddlers to teens and beyond.

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