How to Teach Your Teens About Financial Independence

April Peveteaux

teaching kids about moneyBefore you know it, your kids won't be living under your roof or with your day-to-day guidance.

Yes, it's a little scary.

Hopefully you've been setting good financial examples, along with good eating habits and good manners in your household, so your teens will turn into responsible adults.

But there is more to raising a financially savvy teen than simply hoping they live by your good example. Have your kids take these five actions for a more solvent future:

1. Get a Job

Yes academics are very important, but so is learning how to answer to someone other than a parent or someone (a teacher) who is paid to make you listen. Even more important is seeing the value of his work in his paycheck. Explain how taxes and social security work so he can read a check stub and understand what he's really taking home. One or two nights a week won't interfere with the GPA and could teach him a lot more than cramming for a test.

2. Get a Credit Card

I know this seems dangerous, but many credit cards allow you to request a card in your child's name. This way you see what they're spending and still have some control. Set a spending limit, or set up their own account with a pre-set limit, and discuss every expenditure. Have them pay the balance every month through their part-time job, or barter with jobs around the house. Be sure you account for interest, and explain to your child why that's a part of the spending limit as well.

3. Take Her Shopping

Whether it's groceries or back-to-school clothes, make sure your teen plays an active part in budgeting and bargain hunting on a regular basis. Set your budget before you walk out the door, and have your child write down totals as you shop. If she wants the $50 jeans, explain what she'll have to sacrifice as a result. Take her along often enough, and she'll soon be a natural at financial planning.

4. Watch TV

Specifically, the commercials. Have your child take notes during her favorite programs about what she sees and how much it will cost. Explaining the goals of advertising vs. the reality of budgets and spending will equip her when she's away from home and has to have that leather jacket -- right now.

5. Set a Long-Term Goal

If your son is begging to go on the church ski trip, sit down with him and help him figure out how much money he needs to save per month to pay for the trip, and have money for expenses while he's away. Whether he earns this money through his own devices, or you work out a chore system, stick to your guns and make him earn his goal before he's free to go.


Image via Rob Lee/Flickr

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