Tips for Teaching Your Teen About Money

Do you remember when in elementary school you learned to count money? I recall worksheets with printed quarters, nickels and dimes. Your teenager more than likely learned to count money the same way. What many teens don't understand, however, is that there is no magic money tree in the back yard, and not only do they have to be able to count their money, they also need to be able to budget their money. Teens that don't learn about money while they are still at home will have a rude awakening when they move out.

This is where your parenting skills come into play. If you begin teaching your teen about managing and budgeting money early, then by the time he is ready to get out on his own, he will have a good understanding of how finances work.

Allow Your Teen to Earn Money

Even if you are struggling yourself, it's important to allow your teen a chance to earn some money each week. This teaches him that money doesn't just appear and will help him understand what you mean when you say "I can't afford it." The allowance or earnings for the week should depend on whether your teen has completed his chores all week. Not only will your teen earn money, he will also learn responsibility and taking care of his tasks without being told. Basically allowing your teen to earn money around the house is setting him up for success in both his personal life and his career as he learns these vitally important facts.

Once you are confident in his abilities, you can allow your teen to earn money by working for people in your neighborhood. My oldest earned enough money the summer he was 14 to purchase his own computer, by helping elderly neighbors with their lawn care. Babysitting, dog walking and other simple services can help your teen learn more about earning and managing money.

Make Your Teen Accountable

To make sure that your teen is not just wasting the money he earns, you have to make him accountable for the money. A blank checkbook register is ideal for your teen to enter his credits and deduct his debits to account for his expenditures. This lets your teen see just where the money goes, and to learn to make smart choices in order to get the most for his hard-earned money. Don't be surprised when your teen decides that he doesn't really need that new CD when it comes to spending his money instead of being handed a $20 from Mom.

Teach Your Teen to Save

My parents took a percentage of my earnings when I was a teenager and put it into savings for me. The money they had helped me save enabled me to tag, insure and maintain my first vehicle. The savings your teen sets aside can be used for large purchases he has saved up for, such as a computer or a car. Your teen may not be happy with deducting $5 or $10 from each of his "paydays" but when he sees the result, you will have converted your teen into a near adult who knows the value of saving.

Stick to the Plan

Even when your teen gets old enough to have a real job, continue the practice of saving and being accountable for the money he earns and spends. You only have so many years to teach your teen to be a responsible adult. Don't slack off near the finish line; the more money your teen earns, the more he needs to learn how to budget and manage his spending.

Teaching your teen early in life about how budgeting and money management work is a very important step to raising an adult who is aware of financial challenges and who knows that he will have to work for every penny he gets. You know that you can't just "tell" a teenager anything; you have to show, repeatedly, to get anything to sink into their stubborn and distracted brains.