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8 Tips to Teaching Teens Financial Responsibility


With the current economic downturn, it is increasingly important that teenagers understand how to manage their money. Learning the basics of budgeting before moving out on their own is a necessary step toward ensuring that teens grow up to be financially responsible adults. Setting a good example for your teens to follow and a little parental involvement may be all it takes to transform naïve teens into budget-conscious adults.

Leading by example

Even before teens accept their first jobs, they're watching you, their parents. You can involve your teens in the family budgeting process to teach them how to set financial priorities and make important decisions about spending - and saving - money. Choosing to be spending-savvy parents makes it easier to pass on cost-saving techniques to your teens. Here are a few meaningful activities to share with your children:

  • Discuss your family's monthly income and expenses. Explain to your teens how you prioritize spending and the difference between needs and wants. For example, you need a home, food and utilities, so bills and grocery expenses generally have priority over wants, like a new television or a family vacation.
  • Emphasize the importance of saving. Teach them what it means to have a "rainy day" fund and why having extra cash on hand can be useful in the event of unexpected expenses. Also, make an attempt to cut back on unnecessary spending, like dining out or stopping for coffee each morning. Saving a little here and there may seem trivial, but show your children that over a period of time the savings are significant.
  • Research before spending to make smart purchases. Make sure that they know the importance of product research and reviews and cost comparison before making a large purchase, like a new phone with the required monthly service fees, a computer or a car.

Budgeting with an income

When your teens take on a part-time job, don't be afraid to get involved in their budgeting process. View your teens' paychecks as teaching tools that can help them prepare for the future when they will deal with a large income. Here is some advice to ensure that managing dollars and cents will provide important lifelong spending sense for your teens:

  • Establish a bank account. You may already have a savings account established for your teens, but with the addition of a paycheck, it might be an appropriate time to open a checking account as well. Show your teens the value of shopping around for a bank or credit union to find one that offers accounts with no monthly fees, low or no minimum balance requirements, parental access and competitive interest rates. It also may be beneficial to find a bank that allows quick and easy money transfers between checking and savings accounts to make saving even easier.
  • Review monthly statements together. This is a good opportunity to discuss your teens' spending habits and emphasize the value of keeping track of spending. Encourage your teens to keep a spending journal or detailed check register so that they can be aware of their habits and make adjustments to meet their goals.
  • Encourage conscientious spending. These days, spending money can become mindless. With just a swipe of a debit card or one-click online shopping, it can be easy to forget that these swipes and clicks deduct hard-earned money from their bank accounts. Actively documenting spending will force teens to consider the purchases they make and to think twice before spending money on something that is not a necessity.
  • Consider having your teens pay for some basic needs. Saving should be a priority for teens since, while living at home, their basic needs are covered. However, you may find it worthwhile for your teens to assume some financial responsibility at home, like paying for their own gas, car insurance or cell phone bills.
  • Encourage your teens to work toward a savings goal. Talk with your teens to decide on a realistic monthly savings goal. Set a savings goal to provide a little motivation. Whether it's the purchase of a car or an upcoming class trip, a targeted dollar amount can bring a purpose to saving.

Above all, remember that this is a learning process full of teachable moments and, inevitably, a few setbacks. For additional support or suggestions, visit the Department of Defense's Military Youth on the Move. Navigate to the appropriate age category for your children, and select the money-related topic in the menu.


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