.png){kind=small}
Talking to your teens about money might not be at the top of your parenting to-do list. It wasn't for me. I never consciously made it a priority, and I quite frankly, I wish I did.
It really is one of the most important lessons we can give our kids.
Managing money is a skill they'll need for the rest of their lives. Whether it's budgeting, saving for something big, or just understanding that getting a credit card doesn't mean getting "free money".
I know many of us adults struggle with money management, but we certainly don't want that for our teens. We want them to be prepared. To know what there is to know. We want them to be financially responsible and to be able to manage their money so they don't get into situations that many of us are stuck with.
We don't want them to be stuck with overwhelming credit card debt and living beyond their means, and owing more than they earn. That's not a peaceful path. It weighs on you and brings you down.
The problem is that most schools don't teach financial responsibility in a meaningful way. That means it's up to us as parents to help our teens build smart money habits before they step out into the real world. Otherwise, they could find themselves struggling with debt, overspending, or worse, not having any knowledge of how to handle their own finances.
So, how do we teach our teens about money in a way that actually sticks?
Why We Need To Teach About Money
If you've ever handed your teen a $50 or a $100 bill and watched it disappear without a second thought, you already know why money lessons are important.
Without the right guidance, teens can easily fall into bad financial habits. Since they are still dependent on us for most if not all their financial needs, it's easy for them to think they'll always have money available (as if we ourselves are rolling in cash 24/7! Which we wish we were, but we don't!), or they could develop a 'I'll buy now, and worry about it later' mindset. And that's a bit of a hard habit to break once they hit adulthood if it continues on that way.
So teaching them about money now gives them a solid head start. It will help them make better financial choices, understand the true value of earning and saving, and hopefully avoid any debt traps.
Plus, it builds confidence for them knowing they're not at a total loss when it's time to handle bills, rent, or even credit cards on their own.
13 Ways To Teach Teens About Money
You might think that teaching teens about money needs to be this whole well-planned session, but the reality is you shouldn't make it complicated, and it doesn't have to be. The more practical and relatable it is to their everyday life, the more likely it is to stick.
So, whether they're earning an allowance, working a part-time job, or just starting to manage their own expenses, these 13 strategies can help them develop financial responsibility and smart money habits that will snowball as they gain more experience.
Open a Bank Account for Them
If your teen doesn't have a bank account yet, this would be the perfect first step.
A simple checking and savings account helps them learn how to deposit money, track their spending, and (hopefully) avoid overdrafts. With the opening of their bank account, walk them through online banking, how to set up alerts, the importance of keeping an eye on their balance, and the safety steps they should take for the online purchases they'll be making, since that's the thing everyone's doing these days, shopping online.
I opened a bank account for my son as soon as he was old enough to, and with his own debit card and autonomy over his own money, he has surprised me in so many ways. Whether it's paying for his own purchases, phone bill (sometimes), haircuts, and his other wants and needs, and even for social outings, he's been quite responsible. He even budgets when he's saving up for big things. I can't recommend it enough!
Somehow, having a bank account in their own name automatically gives them a sense of responsibility and accountability, and that in itself is a really good start.
Teach Them How To Budget
Budgeting can be boring and feel like a useless thing to do, especially if you're a teenager and have little money to begin with and fewer expenses to deal with. But it's important. It's a plan for how they use their money.
Show your teen how to separate their income, whether it's their allowance, salary from a part-time job, or birthday money, into categories like savings, spending, and giving. You'll most likely get pushback on 'giving', so it's okay to just start with savings and spending.
Encourage the 50/30/20 rule, where:
50% of their money goes to all their necessities, if they have expenses like gas and phone bills.
30% is for fun, like shopping, going out, games etc. And,
20% for savings
Teach them about budgeting apps like MINT and YNAB that make budgeting and tracking their expenses simpler. Or you can teach them to create a simple spreadsheet to track their expenses.
Show Them Money Doesn't Grow On Trees
Do you notice that your teen will spend your money without a second thought, but if it's spending money that they've worked for, then they'll think once or twice because they actually spend it?
So if your teen is used to the thought that money just flows endlessly, tie their spending to work. If they want extra cash, have them do extra chores or small jobs. Allow them to take small jobs outside your home too, like babysitting.
This helps them connect effort to earnings, and they'll think twice before blowing their hard-earned money on impulse buys. They'll also appreciate things more when they've worked for them.
Encourage Saving For Big Purchases
Help your teen set savings goals for things they actually want, like a new phone, gaming console, or even a car. Instead of just giving them money, you can match what they save, offer them an interest, or a bonus of $5 or 5% for every $100 they save.
This not only motivates them by giving them an incentive like that, but you can also explain to them that this also mimics somewhat real-world practices that banks, pension, or investment funds do.
Talk About Credit and Debt Early
Most teens don't understand how credit cards really work. Explain to them that credit cards are money loaned to you by the bank, and if they charge $100 to the card and don't pay it off by the due dates given every month, they'll owe more thanks to the interest banks will charge.
If they're old enough, consider adding them as an authorized user on your credit card. They can use it responsibly while you monitor their spending. This helps build their credit history and helps them understand responsible borrowing.
Let Them Earn Their Own Money
There really isn't a better money lesson than earning it yourself. Whether it's a part-time job or a side hustle, earning their own money teaches your teen the value of hard work and financial responsibility.
You can encourage your teen to babysit, walk dogs, tutoring, or even sell things online.
Not only does this give them money to spend, but it also builds work ethic. They'll soon realize that the more effort they put into their work, the more they'll earn and the more they can spend (and save!).
Introduce Investing In A Simple Way
You don't need to be a stock market expert to teach your teen about investing. The goal is to simply help them understand the ways how money can grow over time.
You can start with the basics, like compound interest. Explain how even a small amount of money, when invested wisely and properly, can grow into something bigger over time.
You can use simple examples, "If you invest $10 today and it earns interest or grows in value, in a few years, that same $10 could turn into $20 or more, all without you doing anything."
If your teen shows interest, you can introduce them to beginner-friendly investment options like index funds. And if there is an option that offers custodial investment accounts for minors, you can consider setting one up and letting them invest in stocks of companies they like. If they love a certain brand of sneakers or spend a lot of time on a certain social media platform, they might be more interested in learning how those companies make money. It's a great way to dip their toes in investing.
Talk About The Cost Of Living
Your teen might not realize just how expensive life can be.
Show them real-life expenses, like how much rent, groceries, utilities, and car payments cost. Next time you sit to pay your bills, sit down with them and explain where the money goes. If they're looking at getting a car, sit down with them and go through all the expenses that come with owning a car, like repayments, registration fees, insurance, gas, maintenance, road tax (if applicable), and other incidentals.
Seeing these numbers will help them understand why budgeting and saving are super important.
Encourage Giving Back
Teaching your teen about generosity is just as important as teaching them about saving.
Encourage your teen to donate some portion of their money to a cause. It could be anything from a charity, a local food bank, an animal shelter, or even a friend who needs help. It doesn't have to be much, and the amount shouldn't matter.
But making it into a habit helps them learn that money can go towards something good and worthwhile. The truth is, giving back teaches them about being grateful for what they have and sharing their good fortune with others, not only will make them feel like they're doing something good for others, but it'll make them feel good too.
Teach Them About Taxes
Taxes might not be the most exciting of things to talk about, even as an adult, but they're the reality of adulthood, so it's better for teens to learn early.
If your teen has a part-time job, they might have been surprised by all the deductions on their salary slip, so sit down with them and go over the deductions. Explain to them about income tax, social security (if applicable), and other contributions so they understand where their money is going. If they're earning from a side hustle, you can talk to them about self-employment taxes.
Even if they don't have a job, you can talk about sales or service tax when you're shopping, or property tax whenever you discuss household expenses, if that ever comes up.
You don't want to overwhelm them. You just want to give them some basic understanding so it won't come as a surprise to them when they start earning on their own.
Use Everyday Moments To Teach Money Lessons
If you're grocery shopping and for some magical reason your teen is with you, you can show them how to compare prices. When you're eating out, you can explain about tipping and taxes. Talk about the fluctuating prices when you're filling gas.
There are so many opportunities every day to teach your teen about money, provided that they're not holed up in their room and avoiding you like the plague. And whenever they do grace you with their presence, remember that real-life situations make financial lessons stick way better than a 30-minute sit-down lecture.
When they see how money is used in everyday life, they're more likely to remember those lessons.
Warn Them About Scams And Online Spending
There are so many online scams floating around nowadays it's scary. From fake job offers to sketchy "free trials" deals, scams can target anyone, especially teens who are a little more inexperienced.
Teach them how to spot red flags like:
"Get rich quick" schemes
Requests for personal or banking information
Job offers and websites that seem too good to be true
Get them to come to you first before making any online purchases, especially from sites they're unfamiliar with. You're not trying to control them, but you just want them to be safe, even online.
Lead By Example
The biggest money lesson you can give your teen is to just show them what responsible money management looks like. And that's from you! They watch you more than you think, and if they see you budgeting, saving, and making smart financial decisions, they're more likely to do the same.
Talk to them openly about some financial decisions you're making, like why you're saving for a vacation rather than using a credit card, which on the surface would seem so much simpler.
I'm sure you've made money mistakes too, we all have, so share those too. It's good for them to know that you've had your share of mistakes handling your finances, and that's why you're sharing with them, because you don't want them to make the same mistakes. Money mistakes can ultimately be costly, and nobody wants that.
Teaching your teen about money isn't going to be a 45-minute conversation, but it will be an ongoing process. Again, you don't have to be a financial expert to give them a solid foundation, but you do have to know a thing or two yourself so you'll be able to give them the advice that they need to hear.
Involving them in real-life money decisions, encouraging them to save and budget, and helping them understand the value of earning their own money are great first steps in teaching your teens about money.
These lessons will stick with them long after they leave home, helping them make smart financial choices and hopefully, avoid any costly mistakes.
If you enjoyed this post, I'd love it if you shared it on Pinterest! Thanks!
