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What Every Teen Needs to Know About Money

Budgeting Basics | Real World Financial Advice | Teach Your Kids About Money | From Piggy Bank to Personal Responsibility | 10 Money Tips for Teens

Did you know that in most states, high school students aren’t required to take a personal finance class?

While they’ll certainly learn writing, chemistry and algebra in high school—understanding money basics is a vital skill many kids lack when they get to college. So, one of the most important skills we can help our teens learn is how to manage their money.

Once our teens are out in the “real world,” expenses will add up quickly. There are pricey textbooks to buy, rent to pay, roommates to split bills with, new modes of transportation to figure out, plus food and entertainment expenses. It’s a lot to learn on the fly.

Then, if your 18-year-old gets that first credit card with no understanding of the consequences down the road, they can do some real damage. Student loans are one thing, but adding high interest credit card debt to the mix can result in a mountain of debt.

Kids who understand how to save and the importance of planning for their future have a huge advantage when they enter the adult world. Plus, in the process of learning how to manage money, our kids pick up other valuable skills as well. For example, landing that first part-time job teaches kids the value in a strong work ethic, helps keep them out of trouble, and helps them learns valuable social skills that will carry them throughout their lives.

So start smart! Teach your teen these valuable money tips now to ensure they start off on the right foot toward a strong financial future.

Budgeting Basics | Real World Financial Advice | Teach Your Kids About Money | From Piggy Bank to Personal Responsibility | 10 Money Tips for Teens

1. Budget & Banking Basics

Just as we adults need to understand the importance of budgeting, kids also need to “get” budget basics. Help your teen write out a basic budget—write down money earned, money spent, and where the remaining money will go. Include savings and charitable giving as well. We offer this  printable budget worksheet if you need a simple way to help your teen get started budgeting.

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Most high school students can handle a basic savings account—and by age 16, many are ready to open a checking account as well, especially if they’re earning money from work. Some banks and credit unions offer special “teen accounts” where parents can view and guide their kids through financial decisions. You might also want to ask your bank if they offer a reloadable debit card for teens, like TD Go from TD Bank. This type of card helps your teen learn how to responsibly use credit and debit cards.

2. How Much Things Actually Cost

Many kids simply don’t have a handle on how much things actually cost or the value of any particular item. $200 boots or $80 concert tickets might seem like a drop in the bucket. Trendy “haul” videos on YouTube (where teens show off piles of merchandise they just bought) perpetuate the idea of a disposable culture where you can “shop ‘til you drop” without consequence.

Before you shop for items like school clothes or videogames, let kids know the parameters of your budget for the trip. If a teen knows they have $200 to spend on school clothes in total, they’ll be less likely to drop half of it on one pricey item. Also help your kids understand other household costs, like groceries and toiletries, so when they’re shopping on their own, they’ll know a great value when they see one.

Budgeting Basics | Real World Financial Advice | Teach Your Kids About Money | From Piggy Bank to Personal Responsibility | 10 Money Tips for Teens

3. What Your Family Finances Look Like

Many of us don’t want to burden our kids with or own financial worries and concerns. We may be hesitant to share our finances with our teens or let them know how much we earn. While using discretion when it comes to sharing information with your kids is advised, letting kids see your home budget and modeling good spending habits can help them get a better understanding of what a household’s finances really look like.

When you budget for your next trip to the grocery store or for an upcoming vacation, share the amounts with your teen and let them know your spending plans and parameters. You might be pleasantly surprised to find they’re more supportive of staying on a budget when they’re part of the planning process.

4. Why Saving Up is More Satisfying than Instant Gratification

One of the most important lessons kids can learn is how to save up for something special. This process helps them understand the value of what they’re getting and will also teach them that they can work to achieve their goals and make their dreams possible. Think of how much more satisfying their Xbox or new bike will be when they’ve worked hard to get it!

If you feel your teen needs some help or if you want to incentivize them, offer to cover half of the item if they save up for the other half. If they don’t have a job, find ways for your teen to earn money or implement a rewards system so they can get the things they want by helping out.

Budgeting Basics | Real World Financial Advice | Teach Your Kids About Money | From Piggy Bank to Personal Responsibility | 10 Money Tips for Teens

5. No Means No

When we cave to kids’ demands, it sets a precedent—x amount of whining or teasing is what it takes to get something. While we may want to indulge our kids (and childhood is short, so we may have a hard time saying no), sticking to our guns teaches kids an important lesson in boundaries.

Nowhere else in life will begging or demanding pay off. Learning that we have to respect boundaries and work for things we want are important life lessons that all kids need to understand. When your teen gets to college or moves out on their own, they will quickly learn this lesson. Help them get a head start by always standing by your answer.

6. The Value (& Fun!) of a Part-Time or Summer Job

Remember your first job? Maybe it was serving ice cream, bagging groceries or helping out at the local pool. Whatever you did, I’m guessing you have a few fond memories of it—you probably built great friendships and loved the independence that came with earning an income.

While high schooler’s primary job should be learning and going to school, many teens love the opportunity to earn some money on the side. Help your kids find a job that fits their personality and aptitude. If they’re great with kids, maybe a summer nanny gig or babysitting would be great. If they love dogs, why not walk pups in the neighborhood to earn some dough? Retail, fast food, and outdoor jobs can also be great for teens. It gets them out of the house, teaches them responsibility, and helps them prepare for a “real job” later on.

Budgeting Basics | Real World Financial Advice | Teach Your Kids About Money | From Piggy Bank to Personal Responsibility | 10 Money Tips for Teens

7. Why We Give Back

Teach your kids the importance of charity and giving back to others. Giving money to their church, a cause they support, or another endeavor can help kids learn the satisfaction and joy that comes from giving to others. It helps them feel they’re a part of their community—and they’ll even be able to see how every small donation adds up and can help those in need.

Many teens enjoy participating in run/walks for charity or food/clothing drives as well. Learning how to volunteer your time or collect items for a drive can be a powerful lesson. Teens will understand the value of their time and how they can experience the warm feelings that come from working hard to help people.

8. How To Save for/on College

High school students should understand the correlation between good grades, doing well in school, and scholarships and financial assistance for school. Many high schoolers, especially in their freshman and sophomore years don’t make the connection that their hard work now will pay off when they’re applying to schools and looking for financial assistance.

Teens can get a jumpstart (and save on college) by taking AP classes and testing ahead on certain subjects or doing concurrent enrollment and taking college-level courses in high school. If they’re involved in sports or a school club, encourage them to excel so they can work for a scholarship. If you feel it’s appropriate, help your teen save for college or figure out a financial plan to help them pay-as-they-go and do what they can to avoid student loan debt.

Budgeting Basics | Real World Financial Advice | Teach Your Kids About Money | From Piggy Bank to Personal Responsibility | 10 Money Tips for Teens

9. Why Healthy Choices Lead to Wealthy Lives

Alcohol, cigarettes and other habits can cost a lot of money, as can splurging on expensive food and entertainment. Exercise and a healthy lifestyle can help stave off a myriad of expensive problems later in life. Teens who understand the consequences of their choices now are more likely to avoid the financial and physical toll later on.

Help kids make healthy lifestyle choices. Encourage them to be active, exercise, eat healthy, and embrace a positive mindset and outlook. Teens should understand that healthy lives are well within their grasp and that working out and living healthy don’t have to be expensive.

10. How To Protect Their Identity

In the days of social media and online activity, identity theft is rampant. Teens who may be used to oversharing and putting information out there should understand that there can be dire consequences—from identity theft to a potential employer or college viewing compromising photos.

Tell your kids the dangers of sharing too much online and of being fast and loose with credit card and financial information. Help them select passwords that are strong and increase their privacy settings where needed. Teens look to us as parents to help navigate the world. It’s our duty to give them the skills they need to be protected.

Help your teen be successful in the long run by helping them learn these smart financial lessons in high school. They’ll be more prepared when they move on to college and the big world and they just might be able to help their peers make better choices as well.

Many banks, credit unions and even high schools offer personal finance classes and activities. Encourage your kids to sign up and check out the resources available in your area. Kids will be proud of their financial savvy and independence and you can rest easy knowing your teen understands these valuable financial lessons!

Budgeting Basics | Real World Financial Advice | Teach Your Kids About Money | From Piggy Bank to Personal Responsibility | 10 Money Tips for Teens

7 Comments

  1. April
    July 24 at 09:45AM

    Hello, Ruth,

    The article on teens money finance is dead on accurate and interesting to learn more about. I also enjoy reading the part about teens involvement with parents finance planning guide. Most parents do think that children do not need to know or it’s any of their business to view their parents’ finance. I will be one to say in the past that I thought the same way. However, when our daughter entered teen years and clothes, makeups, accessories, and etc…builds up pricey tags. Well, let’s just say a family like mine cannot afford these things for our daughter and tried to explain the importance of budgets. Our daughter just couldn’t understand why she couldn’t have all these things all the time, while all her other friends were showing off with what she would like to have. The difference, her friends have parents with money or parents that are not letting their kids on their debt problems. I am a parent whom teaches our kids the importance of money and how to budget money for needs, as well as when it’s ok to splurge on wants.

    Our daughter learned first hand a little over a year ago how tight money has been around the house, when I was off for three months to care for my dying mother with lung cancer. Prior to that I took a lot of time off work to take my mother to appointments and when she needed help. No second income to help my husband with bills, groceries, accessories, school needs, or kids clothes. It was very rough. So rough that we took out two credit cards to max til I can get back to work. Even now we are still paying off those debts. My job is no paying job and little at a time is what we can do. The worse part is that our daughter is sixteen years old and no car. She started working a year ago to save up and yet to have enough to afford a car. While, we are working with her to come up with a plan in a car by the time school starts, it’s not easy. Our daughter has realized that we are not rich and tries to do what we can best, she has tone down the demands. She is starting to learn the responsibilities of her own finances. She has graduated to her own checking account with her own debit card a couple months ago. It’s a good feeling:)

    PNC bank has a great app for consumers to view their finance and keep track of their earnings, spendings, and savings. Infographic of money bar helps visualize money graph. PNC bank also helps students with financial goals toward college. Great system to check out for teens.

  2. July 24 at 02:10PM

    These are all awesome suggestions that I’m totally going to keep in the back of my mind for when my kids get older!

    Paige
    http://thehappyflammily.com

  3. July 24 at 10:27PM

    Good points, Ruth. The other rule that I have is that now my children have left home, I am careful to not bail them out whenever money is tight. Part of financial independence is realizing the consequences of their choices. At the same time, they have options such as living at home for nothing if they choose to, so they always have that safety net.

  4. July 25 at 03:55PM

    These! All of these! I grew up working with my parents, then got a job at 14. We bought our own school clothes, paid for insurance and gas, and took care of our own needs in a sense. It made heading to college much less scary, as I had already been doing it for so long. Now, my parents taught the basics, but had no real knowledge of how to really teach me to handle finances. I ended up getting into a bit of student load debt, $10k, and worked the rest of the way through college to prevent that from continueing to grow.
    Now that I’m a mom, we are starting very young. My 1st grader will be learning about finances, although on her level of course. She has been saving and tithing since she was 4 and has learned what it means to work and earn money. We are determined to give them a strong foundation to grow on, and know we have to start now.
    These are excellent tips!! Thank you!

  5. July 27 at 05:45PM

    Excellent article this is a very important subject even learn about money not to live in his functions

  6. August 9 at 01:25AM

    This was such a great article and such an important subject. We were very blessed to have our local city credit union offer a free six-week finance class to all teens. All you had to do was sign up and have $5.00 to open an account. When they completed the entire class the credit union then added $20.00 to the account. My teens got free checks, atm cards and the older teens are able to apply for a low limit credit card to learn how to manage credit. I highly recommend checking with your local credit union to see if they offer anything like this, it was very beneficial for my teens!

  7. October 5 at 08:07AM

    I really enjoyed this post. When I was younger, I didn’t have anyone to teach me financial stuff. The book that helped me was, Rich Dad Poor Dad. This is also a good site: http://www.Preparemykid.com

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