by Emily Hechler 
Money makes the world go round, and that seems especially true for teens. They might ask for $20 when they go out with friends. The price of their matching sports equipment isn’t cheap. A spring break to 30A costs how much?
Some expenses are necessary, and some things are just a luxury. Teaching your teens money management and personal finance skills can be a way to take some expenses, both needs and wants, off your plate. Plus, your teen learns how to use their money wisely.
Here are some ways to teach your teens about money management.
Set up checking and savings accounts. With only $1 for each, Alltru’s StepOne checking and savings accounts specifically for teens can give your teens the experience of managing their own accounts. A parent or legal guardian is needed to open these accounts since they aren’t legal adults yet. The accounts are easy to manage with mobile and online banking. Plus, they can get a free debit card so they don’t have to carry cash. Competitive interest rates also encourage saving instead of spending.
Give them responsibility. Instead of giving them an allowance or money because they ask for it, have them give you something in return. If they want $10, have them cook dinner. They can have $20 if they rake the yard. Running errands all week will earn them $50. You get the idea. They’ll quickly see the effects of not contributing to the household – no money. This helps teach the connection between effort and reward while reinforcing the importance of responsibility.
Encourage them to get a job. When they are old enough, encourage your teen to get a part-time job through an employer instead of babysitting or doing lawncare service for the neighbors. They’ll see how quickly they can regularly earn their own money. Plus, they might get to file for taxes the first time – a great learning experience.
Follow up on their personal finance class at school. Missouri now requires every high school student to take at least one semester of personal finance classes before graduating. With this in mind, ask your teen about the topics they’re discussing and what assignments they’ve been given. Use their lessons as an opportunity to build on what they’re learning by explaining how concepts like investing, credit scores, and mortgages, are applied in your own day-to-day life. his will help them connect classroom knowledge to real-world financial situations.
Teach them about insurance. A great first financial responsibility for a teen is to have them pay for their own car insurance. If that seems too burdensome in your family, have them pay the deductible and increased cost of monthly insurance if they are in an accident. Regardless of your decision, education about the types of insurance will be important for when they will be on their own in the future.
Show them how to pay bills. If your teen is going to start making regular payments toward something, show them how to pay bills. I prefer paying bills online with online bill pay but my husband prefers to mail a check. Show them both so they won’t be caught off guard in the future. Don’t feel the need to demonstrate this though a large bill such as a mortgage or your car payment. The concept works for paying your water bill or electric bill too.
Demonstrate comparison shopping. It’s easy to find something you need and buy the first option you see, but those quick purchases aren’t always the best deals. Show your teen how to comparison shop the next time you are at the grocery store or on a Target run. You can buy a $40 bath towel or the similar $25 alternative. That $15 savings can go a long way, whether it’s helping lower your monthly bills or being spent on something else like Starbucks (girl math!). Teaching them this skill will be especially helpful if they’re headed to college soon, where managing their budget will be key.
Create a budget. Without any guidelines, managing money can be tricky, but having a budget in place makes it much easier. Put a positive spin on budgeting by framing it as a helpful set of guidelines to follow. Giving your teen a bit of flexibility in their budget can also make it easier for them to stick to. If your teen is covering some of their own expenses, you could try the 50/30/20 rule: 50% for needs, 30% for wants, and 20% for savings. This simple structure will help them learn how to balance their money and make thoughtful spending choices.
Teaching teens about money doesn’t have to be an overwhelming struggle that leaves you both frustrated. By following these tips, you can help your teen develop positive money management skills. Implementing these changes might be tough at first, especially if their friends aren’t following similar habits. While they may stumble along the way, they’ll begin to understand the consequences of their financial decisions. In the end, they will have learned valuable lessons from their experiences that will help them manage their money more effectively – both now and in the future.
