Teaching the Value of Money to a Teen

To some of us, the value of money comes very easy to us, with budgeting coming as a sense rather than a skill. We can sniff out the bargains, do the math quickly in our heads as to the amount something costs per ounce, all while having a running checkbook balance in the upper left corner of our brain. But for the rest of us, we really need to keep accurate records and save every receipt to keep the firm grip on our finances that is crucial to being a responsible adult. These are the values we need to instill in our teens so that they may follow in our footsteps.

First things first, you teen needs to make some money so they can learn the value of it.  This is the full responsibility of us parents, as we are the first “employers” of our kids- through allowances, if you have decided to utilize them in the past.  If not, there’s no better time than the present to start putting dollar values on mowing the lawn, taking out garbage, and/or doing the dishes after dinner.

Now that your teen has a few dollars to spend, they should be aware (or at least begin to be aware) of what it costs to do or buy certain things, as well as the value of the dollars themselves.  $120 for a pair of sneakers may suddenly seem stupid when junior’s forking out the dough himself. Inform your child about the benefits of saving just 10% of their earnings, but don’t force them- that will just create the rebel effect and all monies will be gone within seconds of being received. If you haven’t done so yourself, show them how much money you would have now if you only had saved 10% of your earnings, even without the interest, compounded or not, it would sure make a great umbrella for a rainy day.

When you’re feeling secure about a weekly allowance, up the ante a bit and include their personal expenses, say for example, their lunch money.  If they normally pay $2.00 per day for lunch, add $10.00 to their weekly allowance and have them pay for their lunch for the entire week.  If they arrive home after school on Thursday and Friday and eat everything in the fridge, it’s a pretty good sign that they mis-budgeted for the week.  Adding more financial responsibility at this time is not a wise idea.

Before the kids go off to college, it’s imperative to all parties involved that the skill of being able to budget money for more than one week, perhaps even a month, is mastered.  Do you really want to deposit money into their account every week?  Will they learn anything if you do this? Some may call it brutal, others may call it tough love, but this is just spending money we’re talking about here, not their college tuition or food (as long as you’ve bought the meal plan, they won’t starve). If junior wants to spend all of his money the first weekend, maybe boring week 2, week 3 and week 4 of the month are just what the doctor ordered to set him on the path to smart financial future. 

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