Financial Responsibility Tips for Teens

Teenagers are impulsive, emotionally intense, and (usually) inexperienced when it comes to money. Adolescence is an intense time, and most kids are too busy trying to make friends and fit in to think about building their savings. But before you know it, they’ll be off to college, where they’ll have to be responsible for their own finances. How can you feel sure that they’ll make safe choices? Try these financial responsibility tips for teens to prepare your child for the real world.

Your daughter is in her favorite store, trying on sunglasses, and she’s finally found the perfect pair. But it’s summer, and all the new arrivals are full price. Does she insist that she has to have them? Or does she suggest that you come back when they’re on sale?

For most young adults (and many adults), instant gratification wins out. Social pressure is fierce, and the fear of being the “only one” without the cool accessory of the moment can be all-consuming.

This is doubly true because teens have never had to be responsible for their own livelihood. Even kids who work part-time at the mall don’t have to make that paycheck stretch to afford food, rent, insurance, and medical bills. The concept of money often feels nebulous and immaterial.

So how can you make money feel tangible and specific for your teen? How can you draw the connection between those trendy shades and the paycheck that will pay for them?

So your teenager doesn’t understand the value of a dollar? Not a problem. Understanding the value of money is as simple as subbing in an item of equivalent value.

That sweater doesn’t cost $40; it costs “six sandwiches.” Those pricy concert tickets aren’t $120; they’re “a round-trip flight to Florida.

Better yet, show them the equivalence of time and money. Let’s say that an hour of work is worth $10. When your child asks for a new pair of shoes, ask them if those $90 shoes are worth nine hours of work.

When your kid asks for money to go to Starbucks with their friends, do you just give it to them? If so, consider setting a regular allowance instead. Give your child a set amount of spending money at the beginning of each month, and tell them that they can spend it wherever they please.

If they blow the whole sum at the beginning of the month, they’ll just have to skip the Frappuccinos until next month. Hopefully, that’s a mistake that they’ll only make once.

Does your child have their eye on some costly concert tickets or a name-brand coat? Sit down with them and help them set a goal for when they’d like to make the purchase. Then, help them figure out how much they’d have to save each month in order to afford the purchase by then. This is the very first step toward building savings: learning to delay gratification.

A lot of kids have no idea how much money adults have to spend on a day-to-day basis. How can you remedy that? For a week or a month, make your expenditures totally transparent.

Are you taking your kid out to get groceries? Walk them through the bill on the drive home. Are you having a nice dinner out? Show them the bill — and ask them to help you calculate the tip. Are you getting gas? Point to the meter and watch with them as the cost ticks up.

Most teens think that all grown-ups have to pay for is food, rent, and clothes. Make sure they understand that being alive is expensive and that they’ll have to pay for necessities before shelling out for indulgences.

Of course, the best way to show your teens the value of a dollar is to make them earn one. If your child has free time after school or on weekends, suggest that they apply for a part-time job. After wrangling customers for a few days at $12/hr, they’ll have a much clearer sense of how much work it takes to earn that trendy $40 sweater.

If you’re worried that a part-time job will distract your teen from their studies, you can give them a “job” right at home. Instead of simply giving them spending money, pay them a flat or hourly fee for certain chores. That way, instead of their dream purchase costing $40, it will cost “eight times emptying the dishwasher,” or “six loads of laundry.”

Piggy banks are cute, but they’re not a great way to keep track of your money. Give your kid a clearer sense of their savings by helping them open a checking account. This way, they can use their bank’s app to check in on their savings, but (unlike a credit card) they won’t accidentally spend money they don’t have. Plus, they can learn about things like interest and overdraft fees.

A lot of young adults assume that their financial woes will go away as soon as they’re earning a salary. But as we all know, it’s rarely that simple.

You can correct this misconception by playing a game. Sit down with your child and help them set a budget for the average cost of living in your state. Add up the average monthly cost of groceries, rent, car insurance, health insurance, and gas.

Then, look at a few “imaginary salaries.” Start with the minimum wage in your state (assuming a 40 hour work week) and go up from there. How much income would it take for them to afford the bare necessities? How much would it take before they could afford to save up for a trip? How much would they have to earn to afford an extra $500 to spend on clothes and fun each month? How much before they could afford an expensive emergency medical procedure?

Make sure they know that earning a salary won’t fix all of their financial woes — they’ll also have to earn a good salary. And even on a decent salary, they’ll still have to be conscious of their spending and saving.