Teenage Money Management Tips: How to Talk to Your Teen About Managing Money
You might shell out $20 so your kid can go to the mall with their friends or grab a smoothie with the rest of the team after practice.
However, once they reach working age, they might be surprised when you hit them with the ol’, “If you want to go, you’ll have to pay for it.”
Try to remember your child has no experience earning or managing money, only spending it. Instead of hoping they’ll figure it out, give them some guidance to avoid financial trouble down the road.
Have an Open and Honest Conversation
If you’ve had the sex talk, the drinking talk, or the drugs talk with your teen, you probably already know the tenets of important parent-to-kid conversations. If you shied away from these, fret not. Some of these skills can help you with those conversations, too!
First, let them know you value their growing independence. Teaching them about finances empowers them to become a more independent, confident adult. You’re not educating them because you’re getting ready to cut them off, you’re educating them because you believe in their ability to manage money well.
Let them know that while you believe in their ability to be responsible, mistakes are also a part of life. Debt, late fees, emotional spending, investing, and doing taxes on your own are all challenges that come with managing your own money.
Be a safe space for them to come to you for guidance on any of these topics. (Even after they’ve moved out.)
Listen (or ask) for their insecurities about money going into getting their first few paychecks. Help them feel heard and supported, and try not to blame them for things that go wrong. Hiccups come with growth, so opt to focus on what they can do better next time.
Share the Reality of Your Family Budget
Whether you show them your actual bank statements or just a percentage breakdown of your household spending is up to you. Either way, you should be as transparent as possible.
Odds are they won’t meet another person who’s this willing to show them their personal finances. It tends to be a private, taboo topic to discuss, but real-world examples are necessary to ground their experience.
Invite them to participate in family financial decisions. Think budgeting out a grocery list or a more fun, creative endeavor, like re-decorating the patio for summer.
Visualize Healthy Money Management
Get a few baskets to help your teen visually split up their paychecks into essentials, personal spending, and savings. A classic rule of thumb is the 50/30/20 rule—50% toward essentials, 30% toward recreational spending, and 20% toward savings.
As they get older and build more of a routine for themselves, they can adjust these numbers as needed. However, it’s always great to have a place to start.
Managing Money: Plan Short-Term Savings Goals
Come up with a savings goal that you know your teen can achieve in under a year. For example, say their favorite artist is coming to town in three months. Go over the cost of tickets together and assist them as they work out a budget schedule to reach their goal.
Keep the budget goal in a public space where you and them can check in with it often. Try not to micromanage and simply let them figure it out until they come to you with questions.
Open a Savings Account Together
Most banks won’t let teenagers open savings accounts without a parent. Make a day of it! Take your kid to lunch, then hit the bank to open the joint account together.
Choose something that offers no fees, online management tools, and maybe some benefits tied with their place of employment.
No matter how much you prepare them, you can’t prevent everything. Leave your confidence with your kid and your nerves with your therapist. Schedule your first appointment with me today.
Click to learn more about Parent Coaching in Corte Madera, CA