When it comes to money know-how, teenagers’ expertise is often limited to one particular aspect: spending it.

As with most aspects of children’s development, parents play an important role in enhancing teens’ financial literacy and helping position them to make smart decisions when they move on to college or start living on their own. The decisions they make involving money become more important. Help teach your teen the value of money: how to earn it, how to save it, and how to respect it.

Budgeting Basics for Teens

First, spend the first couple of months writing down every purchase they make so they can understand where their money is going. Once they see where their money is going, they will be able to see their spending habits and what needs to change.

Monthly Over Weekly

Consider providing your teenager a monthly allowance, rather than weekly. Let them know that they need to make the money last the entire month and continue to track their purchases and know where the money is going.



Consider giving them a Prepaid Student Card and each month add their allowance to the card. A full history of the expenses will be recorded for review each month. They will feel very adult-like with a plastic card. When the money is gone, don’t add any more until the beginning of the next month.

Wish List – Big Ticket Items

When your teen requests big-ticket items like an iPod, show them how to work toward a goal. Based on her allowance, figure out the amount of money she should set aside each week, and calculate how long it will take her to have enough for the purchase. A lot of teens can achieve their Wish List once they stick to a budget.

Once they understand a little about managing their money, consider having regular finance meetings when it comes to the family budget. Get them involved in real world expenses! As teenagers, they don’t see or understand some of the decisions that are made; why trips are delayed or cancelled, why you repair something instead of buying new, why big ticket items take months to purchase, or why your children don’t do, or have the same as others.

Saving Should Become Second Nature

Start with a checking account for daily spending and a savings account for future goals. Ideally, children should learn to set aside some of their money as savings from the time they start receiving an allowance in the elementary school years.

Encourage them to pay themselves first, set aside a consistent portion (Tip: Save 10%) of all money they receive, including money from part-time jobs, allowances, and special occasion money, like for their birthdays.

Let Kids Fail

Let your child make a mistake with their money. If they spend all of their money on something trivial and then when that new video game comes out – and they cannot afford it, it’s a good lesson in saving and spending money wisely.

Parents can also share their own stories with their kids about personal financial failures and successes as part of their effort to educate their teens about money management.

The Importance Of Credit

The concept of the credit score is not lost on the average teen, and though most can’t do much about their credit score during high school, they can lay the foundation for building one in adulthood. By learning the concepts above and putting them into practice, teens will be much better prepared when they begin building their own credit history.

Even if a teen doesn’t obtain a credit card until after College/ University, knowing how they work can help keep temptation in check once that day arrives. Teens should understand how much credit cards charge in interest and how interest can make the true price of an item go up drastically.



Sharing a credit card, auto loan or mortgage statement with your teen can help illustrate the basics of credit and interest or time to pay off credit cards.


A damaged credit score can limit their ability to qualify for apartment leases, auto loans, lower insurance rates or mortgages. And all that interest they’re paying takes a bite out of saving for their future goals and dreams.