Teaching your teenager about financial responsibility

Part of raising your kids is helping them learn how to be a successful, independent and happy adult. That means teaching basic life skills, like cooking, driving, laundry and, yes, money management.

As if having a teenager isn’t hard enough, right?

The good news is that it doesn’t actually take a lot of effort to instill strong money values in a teenager. In fact, taking these simple steps will get them on the right track to a future of responsible spending and saving.

Open a checking account

Once your child enters their teenage years, collecting and holding onto cash will become much more of a hassle. And that piggy bank isn’t doing them any favors in terms of interest.

Find a credit union or bank you trust to safeguard your teenager’s money — one that will offer checking accounts with decent interest rates. But before you hand over that debit card, teach your teen how to access and manage their finances online.

Help them set a budget

Teenagers don’t have a lot of financial responsibilities — they certainly don’t help you pay mortgage on the house — but that’s what makes building a budget easy.

Sit down one afternoon and build a budget template they can start filling out each month and add on to as their expenses grow. Ask them how much they think they want to spend on movies, shopping trips or video games. Look at how much gas they use. If they’re getting close to college age, figure out what their school expenses could be. Finally, subtract that number from how much they make at their after-school job and watch the color drain from their face.

You don’t want to scare them, necessarily, but entering those in manually and seeing how fast it adds up will clearly demonstrate the need for financial planning.

Teach them to read prices realistically

One of the simplest ways to instill a sense of financial responsibility in your teenager is to be more open and conscious about the money you spend when you’re together. When you and the family go out to eat, be honest about what the final bill came out to with taxes and tip. When you drive by a car dealership, explain why a brand new car costs more than the prices advertised on the window. When you go shopping for new clothes for school, considering highlighting the prices of their choices and use the time as a teaching moment.

Setting your teenager up to realize that things tend to cost more than advertised will help them budget and spend reasonably.

Start their savings account early

Once you’ve taught your teen financial literacy, you can start to emphasize the importance of saving some of their money.

Help them open a savings account — preferably at the bank their checking account is with — and put a small amount in. Encourage them to regularly deposit any amount they feel comfortable with. Ideally, this savings account will also offer interest, so they can see how putting money away can actually lead to financial growth.

Lead by example

Finally, the best thing you can do to teach your teenager about financial responsibility is to lead by example. If they see you spending responsibly and actively saving, it’s more likely they’ll pick up on those habits. Be open about your financial successes and where you could have been smarter. Encourage an open dialogue about money management so they feel comfortable asking questions and making decisions.

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