Teen Money: A Guide to Teaching Teens Money Management


It’s never too soon to learn good money management skills. Perhaps you were fortunate enough to have parents who taught you about financial literacy when you were a teen, or maybe it was something you had to learn through trial and error as an adult.

Teaching your teen the finer details of managing their money can be something you both find beneficial. It can also help to set your teen up for a lifetime of sound financial decisions.

Tips for teaching your teen money management skills

If your teenager has a part-time job, it’s important that they learn about taxes, depositing their paycheck, and budgeting. Setting your teen on the right money management path should begin with the process of opening and accessing a bank account.

Opening a bank account with your teen

A personal bank or community credit union will be a great place to start your teen on the road to solid money management. In addition, several bank account options are specifically tailored to meet the needs of children and teens. You must be at least 18 years old to open your own account, so your teen will need your help setting it up. You will likely need to open the account and add your teen.

Once it is set up, your teen will be able to deposit his paycheck, deposit birthday gift money, and learn how to use his debit card.

Keep in mind that there is more to having a bank account than just having it be a place for your teen to deposit the paycheck he’s earning from his part-time job.

Questions to discuss with your teen when opening a bank account:

  • Are there monthly account fees to be aware of?
  • Will your teen have a daily withdrawal limit?
  • Is there an app that can be used to monitor activity?
  • What are the steps needed if a fraudulent charge appears?

Even the most careful and financially wise of us have had issues with fraudulent charges. Help your teen by walking him through each of the potential concerns he could face with his account. Help him install the app on his phone to access it when he’s on the go. The more control than you give him over his finances, the better he will learn.

Reducing poor money management risks

It can be easy to think that your teen isn’t at risk of the consequences that come from making poor decisions when it comes to managing their money. You may think that as a teen, they should be having fun and not spend their days focused on adult financial decisions.

While there is some truth to this, it is never too soon to learn just how poor money management can impact your life.

Money management risks to talk about with your teen:

  • Forgetting about bills. If your teen doesn’t pay anything towards his living expenses, then every penny of his income is free to be spent on anything that he likes. When he moves out, it is unlikely that he will ever again see his paycheck be entirely free to be spent. While this can be fun for a teen who works hard, it can also be setting him up for some bad financial habits. Bills will be a factor in his future, so it can be good to make him responsible for some of his living costs. For example, he could pay for the insurance and gas for his car or pay for his phone bills.
  • Impulse purchases. It’s easy for us all to fall into the trap of impulsive spending when something looks like a great deal or when we want something that looks good. It isn’t easy to teach someone how not to make impulsive decisions, but you can work with your teen to understand whether something is a must-have today or whether they can hold off on buying it.
  • Explaining good debt versus bad debt. As your teen approaches college, he will be inundated by options for student loans, credit cards, auto loans, and more. It can feel like the system is almost stacked against the young person stepping out into the world. Work with your teen to understand that credit cards and other lines of credit are a quick way to get into financial trouble.
  • Paying full price. Your teen may roll his eyes when you bring out the coupons or mention how much money you can save shopping for bargains at the grocery store. While not for everyone, bargain hunting and ensuring you’re paying the best possible price can save you a significant amount of money. When it comes to electronics and even his data plan for his phone, shopping around for the best deal can be a valuable skill to learn.
  • Financial ties to other people. Have you cosigned on a loan with a friend or family member? If it worked out well for you, then you should consider yourself fortunate. Many people find themselves on the line for debt that their friends or family members fail to pay. Remind your teen that being kind and co-signing on a loan can set them up for some serious financial consequences if things don’t go smoothly.

If you’ve made mistakes managing your finances, be sure to tell your teen about it. First, explain how it negatively impacted your financial goals. Then, suggest better options so that your teen can avoid making some of those same mistakes that you did.

Teaching your teen to budget

When you are young, it can be hard to understand just how much things truly cost. It can make it hard for a young adult to learn how to budget once faced with the costs of housing, utilities, food, and other expenses. While your teen doesn’t yet need to meet these costs, he must understand how important it is to budget for these expenses.

Help your teen to establish a budget, taking into consideration any expenses that he does have. Perhaps he pays for his phone and his monthly gaming subscriptions. Help him set up reminders to pay for these expenses to stick to his budget and possibly have something left over to spend on fun things.

A part of budgeting is also to make room for savings. Even a few dollars a month can help your teen to learn the value of having a cushion if it is needed.

Sitting down with your teen to teach him how to respect money and financial designs can help him develop those crucial skills many of us did not learn when we were growing up. Empowering your teenager to learn how to manage his money can help to set him up for a future of intelligent financial decisions.

Does your teen need guidance beyond money management? At Help Your Teen Now, we have valuable resources for teens and families as they navigate their relationships with themselves and others. Reach out to us today for more information.

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