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9009 West Loop South, Seventh Floor, Houston Texas
1-866-889-9347 |
CCCS of Greater Denver
A Division of Money Management International |
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Regional Headquarters - 10375 E. Harvard Ave., Suite 300, Denver Colorado |
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Teaching Financial Skills To Teens Means
Hands-On Experience |
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 There are many ways you can teach your younger kids about personal finances. For the most part, younger kids learn by watching what you do, so the more they see you practicing good money skills, the more they’ll learn.
Teenagers, on the other hand, learn by gradually taking on more and more responsibility. For many parents, this involves giving their children a limited amount of control over decision-making, a responsibility that is sometimes difficult to turn over. Like it or not, they are going to have to learn these skills eventually, because some day they will be out on their own. Isn’t it better for them to have your guidance while they learn?
One of the best ways to get teens started is with a weekly allowance, something that many parents already provide. The part that is often missed, however, is the element of accountability with the money.
An allowance is not effective as a teaching tool if there is no agreement between the parent and the child on what the allowance covers. For example, if you give your teen a $15 weekly allowance, and also spend $10 a week on school lunches, try giving them a $25 a week and telling them it covers their lunches.
The most important part of this strategy is that you absolutely cannot bail them out if they overspend. Teenagers are notorious for testing their limits, so you can almost count on it happening. In the above example, if they come to you on Friday and say they don’t have enough money left over for lunch, and you give them extra money or an advance on the following week’s allowance, the lesson of accountability for their actions is completely lost. If, however, you point them toward the kitchen and tell them to make their lunch for school that day, their motivation to avoid overspending down the road will be much stronger.
Another effective tool is to get them involved in the car buying process, whether the car is for them or for the whole family. Discuss with them such issues as what the car can be used for, who is responsible for gas and maintenance, and who can actually drive the car. Show them how auto insurance works, including how much the premiums increase when they start driving, as well as how much it rises if they have an accident or traffic violation. I also strongly recommend making them responsible for any increases caused by their carelessness.
Get them involved with all your personal finance decisions, such as grocery shopping. Have them help you with the grocery list and show them how to comparison shop, pointing out how much money you save through comparing prices and using coupons. Let them sit with you while you pay the bills, so they can see how much all your monthly obligations, like utilities, phone bills, the mortgage, and insurance, add up to.
Encourage teens to save their money toward a major purchase, even offering to match their savings with an additional 50 cents per dollar saved. This is a great way to teach them the relationship between building a savings account and the positive rewards that follow.
Finally, it’s important to show teens how credit cards work. You might even consider showing them your bills when you pay them. Too often, young adults who get their first credit card perceive it as “free money,” and find themselves in debt very quickly. Make them understand that the $50 they charge today costs a lot more if they don’t pay it off quickly.
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CCCS, A Division of Money Management International
Regional Headquarters - 10375 E. Harvard Ave., Suite 300, Denver Colorado
Corporate Address - 9009 West Loop South, Seventh Floor, Houston, TX 77096
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