Parents - Are Your Teens Financially Responsible?

As parents, you play a key role in shaping your child’s values and attitudes about money management. Talking to your kids regularly about money should start at a young age so they develop good habits by the time they are adults. Unfortunately in today’s society, there are many pressures that can cause people to get into financial trouble. This is especially true for young people, if they don’t have proper guidance.

Guidelines to keep in mind when teaching money management to your teens:

• Watch your own spending habits. Avoid, "do as I say, not as I do."
• Guide and advise rather than dictate and insist.
• Encourage and praise, rather than criticizing and finding fault.
• Allow your teen to learn by mistakes and by successes.
• Express your desire to have things that you can’t afford. Teens need to know that parents say no to themselves too.

If you want your teens to be receptive to your advice…

• Don’t talk down to them.
• Listen actively.
• Welcome their ideas.
• Treat them with respect.
• Don’t micromanage their spending.

Giving a weekly allowance is a good way to teach your kids how to conserve money and how to spend properly. In order for it to be a learning experience, you should establish guidelines about how they should spend their allowance, depending on their age and whether or not they have a job.

Credit cards can be a useful tool for managing money, but can be traps when used irresponsibly. Consider teaching your teens about responsible credit card use by having them become an authorized user of one of your cards or be a co-signer so they can have their own card. Or you can opt for a secured credit card in which the line of credit is backed by a deposit you make on the card. Whatever options you choose… Set ground rules and monitor them regularly!

• Limit your teens to the usage of one card.
• Advise that they pay their bill on time, or pay you their share of the bill if it’s your card. If they are late, they will owe you late fees.
• Make sure they keep track of their charges.
• Make sure they know not to exceed their agreed upon credit limit for your card or their own. Charge them fees if they do.
• Help them understand that irresponsible credit card use will damage their credit history. This will make it hard for them, when the time comes to apply for loans, rent an apartment and in some cases, get a job.

Learning to budget and save is also important for a healthy financial future. Help your teens construct a simple budget that tracks income and expenses so they can see where their money goes and how much they can save.

Things to look for:

•  Are their expenses greater than their allowance or income?
• Are there any areas that can be trimmed for savings?
• Which of the expenditures are needs and which are wants? Help your teen understand the difference.

Learning to manage money well is an extremely important lesson, especially for teenage children. Help your children avoid unnecessary debt by helping them develop healthy spending and savings habits early on. Remember: make sure your own financial behavior is healthy so you don’t send out a conflicting message.

<-- back to article index