How can you teach your teen to manage money?
Your teen is growing up fast. Do you worry about how your teen will handle their money when they're living on their own? You can take steps now to help them build good habits for managing their money.
- Be a role model.
Teach your teen about paying bills and spending money responsibly. Discuss how you make spending choices and manage family expenses. Talk about the cost of necessities like house payments or rent and things like gas and food.
- Make sure teens have their own money to manage.
Let them earn money by doing extra chores around the house. Letting your teen make choices about spending their own money can help them learn to manage it. Give them freedom to spend and save, but talk about their choices. Buying something that they soon find has no value to them can be a good lesson.
- Consider encouraging your teen to get a part-time job.
A job can help your teen learn responsibility and earn some extra spending money. But limit work hours so that the job doesn't interfere with school or homework.
- Teach comparison shopping.
Show your teen how to find deals or shop around for less expensive items. For example, they can decide if they'd rather buy one "name brand" piece of clothing or a few less expensive pieces. Some online apps allow you to set alerts when certain items go on sale.
- Teach your teen to set a budget.
Setting a budget can help your teen learn to be in control of their money and finances. Help your teen track how much they spend on food, clothes, transportation, and other expenses. Talk about the difference between necessities and "fun" money. They can plan what they'll spend on monthly necessities, such as a phone bill, and on extras like entertainment.
- Encourage using budgeting tools.
Apps, computer programs, or spreadsheets can help your teen track spending and saving.
- Encourage saving.
Teach your teen to put a certain amount of money into a savings account each week or month. They might want to save up for a larger purchase they can get later. They can also set aside some savings for college, for donating to a good cause, or for other plans. Use an online app that tracks saving toward a goal.
- Discuss how to use credit responsibly.
Teach the importance of having good credit and the advantages of paying off debt. Make sure your teen knows how interest works. Using real dollar amounts, show them how much more they'll have to pay over time if they buy something on credit. Teach your teen about credit reports and credit scores.