How to Teach Teenagers Financial Responsibility

Teenagers will handle money responsibly when you have provided sound financial education.

Once your teenagers leave the nest, knowing they have the skills to make it on their own will leave you with peace of mind. It is easy for teenagers to get into financial trouble, especially with all the credit card offers and freedom to make endless purchases. Thus, you want to begin teaching your children the value of money when they are young and continue being an example when they are teenagers, handling your own money responsibly. Modeling correct financial stewardship also teaches volumes, enabling your teenagers to handle their money responsibly when they live in the real world.

Instructions

1. Allow and encourage your teenagers to get a job to earn their own keep. They will not only learn early about work ethic but also what it's like to have a job and handle money.

2. Do not frequently come to their rescue. The more you do for your teenagers, the less they will do for themselves. The most loving thing you can do is to teach self-reliance so they won't struggle needlessly in the real world.

3. Let teenagers contribute financially when they want a cell phone, car or even an education. Learning how to pay bills, even if it is only a fraction of the bill, is great preparation. Plus, they will learn to appreciate what they have earned if they worked for it on their own.

4. Provide the practical teaching they often do not receive in school, such as living on their own, paying bills, managing credit cards and checking accounts. Teach your children early about all aspects of finances so they will know what to do when they are on their own and have to live on a budget with such fixed expenses as rent, utilities and more.

5. Start your children out with a savings account early. Give them a money journal and let them deposit and record a portion of their allowance into savings and watch it grow. Show them how to record their expenses and teach them how to balance their money. By the time they reach adolescence, they will know the value of money and know how to handle it responsibly.

6. Prepare your teenagers to expect credit card offers once they leave home. Explain to them the pros and cons of credit cards. Let them know a credit card is a great way to build their credit only if they pay it off every month and on time. Teach them about interest rates and how they will end up paying double and even triple the cost of the items they purchased if they leave a balance on their credit card and only pay the minimum payment.

7. Get your working teenagers started on a Roth IRA. They will thank you later because when it comes time to buy their first home, they will be allowed to take the money out for a down payment. Investing in an IRA will teach them how money grows through investing and also encourage them to save for their retirement and other important needs.

Tips & Warnings

• Allow your high school seniors to get a credit card and review the monthly statements together. It is a great way to practice handling a credit card before leaving the nest.

• If you don't teach your teenagers about financial responsibility, you may end up being financially responsibly for them longer than you planned.

References

• FamilyCircle: Teach Your Teens Financial Responsibility