How to Help Teens Set Financial Goals

Teenagers are social butterflies with mounds of schoolwork, sports commitments and extracurricular activities. It's hard to find time for financial education, but our society's mounting debt is a clear sign that we need to spend a few hours teaching teens how to set financial goals.

Instructions

1. Be open about the family financial situation. Studies have shown that teenagers who are aware of how their family's finances are handled have a better grasp on money. Even if your situation is not ideal, be honest with a teenager. This allows her to begin the process of making personal financial decisions by seeing what should and shouldn't be done.

2. Make your teenager aware of finances in terms of saving, spending, investing and donating. Many mentors purposefully exclude investing and donating, but these are two financial goals of which a teen should be made aware.

3. Give a regular allowance if you are able. Receiving an allowance will help a young person begin to execute financial plans, which is much more valuable than simply learning about money. If you are not in the position to give an allowance, discuss with your teen how he could fit in 10 hours a week for a part-time job. Do the math with him to demonstrate how money from part-time work can add up quickly.

4. Open joint savings and checking accounts. You have access if there's a problem, but the teenager is technically in charge of managing the money. Teens will be much more financially savvy if they know how to write a check and understand how interest works as they approach college.

5. Talk about long-term financial goals. Teens have trouble seeing far into the future, and it's your job to point out what great things lie ahead. Don't be afraid to use the big numbers--for example, college tuition, mortgages and auto payments. Financial planning is not the loss of innocence, and teens need a wake-up call.

Tips & Warnings

• Debit cards are a great way to have a trial run before a teen heads to college or the "real world." Teach your teen about overdraft protection, negative balances and bounced check fees by utilizing a debit card.

• Be excited about financial goals and passionate about money, and that enthusiasm will rub off on your teenager.

• For some teenagers (and adults), financial responsibility takes a long time to kick in. Have patience with your teen and keep reminding yourself that you are practicing with money now so their future is more secure.