Parenting journey

Goal: Help your teen learn how to manage their money

Teen managing their money
Teaching your teen how to manage money is essential for building their financial independence and responsibility. Here are key steps you, as a parent, can follow to equip your teen with valuable money management skills.

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1 | Introduce basic financial concepts

Explain the value of money

Discuss how money is earned, the importance of saving, and the basics of budgeting.

Interest and savings

Teach them how interest works and the benefits of saving money in a bank account.

2 | Encourage them to open a bank account

Choosing the right account

Help them open a savings and/or checking account. Look for accounts designed for teens, which often come with parental oversight options.

Using a bank account

Teach them how to monitor their account balance, deposit and withdraw money, and understand bank statements.
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Make the best personal banking choices: An introduction to personal banking

3 | Teach budgeting skills

Creating a budget

Show them how to create a simple budget that tracks their income (allowance, gifts, job earnings) against their expenses.

Setting financial goals

Encourage them to set short-term and long-term financial goals, such as saving for a car, college, or a special purchase.

4 | Encourage earning money

Part-time jobs

Support them in finding a part-time job or summer employment to earn their own money.

Entrepreneurial ventures

Encourage entrepreneurial activities like lawn mowing, babysitting, or selling crafts online.

5 | Teach them how to practice smart spending

Needs vs. wants

Discuss the difference between needs and wants, and encourage thoughtful spending decisions.

Comparative shopping

Teach them to compare prices, look for sales, and understand the value of money in terms of work hours needed to earn it.

6 | Emphasize the importance of saving

Pay yourself first

Encourage them to save a portion of all money they receive or earn before spending on anything else.

Saving for goals

Help them understand how saving helps them reach their financial goals.

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7 | Introduce investing basics

Simple investment concepts

Discuss the basics of investing, including the risks and rewards.

Long-term growth

Explain how investing can help money grow over time, focusing on concepts like compounding interest.

8 | Teach about credit and debt

Using credit wisely

Explain how credit cards work, the importance of paying off the balance each month, and the consequences of debt.

Credit score

Teach them about credit scores, how they're calculated, and their importance in financial health.

9 | Encourage philanthropy

Giving back

Discuss the importance of giving to others and how they can allocate a portion of their money to charity or causes they care about.

10 | Lead by example

Model good financial behavior

Demonstrate responsible money management in your own actions, as teens often emulate their parents' financial habits.

Stop enabling them financially

If your child is able to earn their own money, pull back on what you pay for when it comes to their "wants". You should still cover their "needs", of course. This might encourage them to earn and be more responsible with their spending.
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By following these steps, parents can lay a solid foundation for their teen's financial literacy, setting them up for a future of financial independence and responsibility. It's a process that not only teaches practical money management skills but also valuable life lessons in planning, discipline, and the value of hard work.

What do you need help with?

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