Talking With Teens About Money: How You Make a Difference
- Set an example. The ways teens see parents manage, talk about, worry about, and deal with conflicts over money become important influences on how they approach money in their lives. If money is a taboo subject or a way that one family member manipulates another family member, these patterns will affect teens. On the other hand, if they see parents trying to manage money responsibly, using it as a tool to live out their values, and talking about it honestly and openly, they are more likely to develop their own healthy attitudes.
- Talk about the reasons for boundaries. Sometimes it’s easy to just say “no” when teens ask for money or to buy things. “No” may be the appropriate response, but it helps for teens to know the reasons behind “no.” Those reasons may include: It’s not in the budget. I need to think about it more before deciding. There is a better alternative. Buying this will make it harder to do something else that is more important to us.
- Plan and make decisions together. Your teens are already affecting your money choices through the ways they influence you. You can help them learn to make better money choices by letting them become part of family decisions regarding money. As you think about your budget, your savings plans, major spending decisions, and what you will give to charity or other institutions that are important to you, have teens be part of those conversations and decisions. In the process, they will see how you approach the decisions, the information you use to guide you, and the skills you use to make decisions and take action.
- Give responsibilities. One of the best ways to shape money habits is to give teens a chance to practice. Give them responsibilities for some of their own purchases and for making decisions about how to give away a portion of their money. (Teens are much more likely to be generous adults if they learn to be generous when they are young.) Even though they may make mistakes (and learn from them), it’s important that they not experience failures that tell them they don’t have what it takes to manage money well.
- Set boundaries on yourself. While it is important for young people to be included in conversations and decisions about money, it also is important that you don’t burden your children with your own responsibilities, stresses, and decisions as an adult and as a parent. Find other sources of support, guidance, and encouragement to help you work through your own financial issues, then let your teen know that you are working hard to solve any problems.
- Start small. If you haven’t paid attention to money management, it can be overwhelming to try to start. (This is true for both you and your teen.) So if you haven’t previously kept a budget or other records, start by simply writing down what you spend each week (or use a computer program or smartphone app that helps you keep track). Once you get used to keeping track of expenses, use the information to help you build a simple budget based on your true expenses and the money you have available. Use this same kind of process to introduce your teen to basic, practical money management skills.
- Give opportunities to develop money habits. It’s better for teens to learn about budgeting, earning, saving, borrowing, giving, and other money matters with you, in your family, before trying to figure out these skills when they are more independent and the stakes are higher. Help your teen use an allowance or any other money (gifts or earnings from babysitting) to set a budget based on priorities, hopes, needs, wants, and goals.
- Pay attention to many different aspects of managing money. Over time, find ways to examine many different aspects of managing money well, based on your teen’s maturity and readiness. Some of the areas you’ll want to talk about and practice include budgeting, earning money, saving, spending, borrowing and credit, investing, insurance, and maintaining a checking account.
- Help your teen become a smart consumer. Through everyday experiences, teach your teen the skills needed to make wise consumer choices. These skills include learning to view advertising and marketing critically, comparison shopping, reading the fine print before making a major purchase, when to use and not use credit cards, and avoiding impulse purchases.
- Move past the financial jargon. It may be tempting to put all your energy into helping teens understand complex concepts and lingo in the world of money without ever actually working on the basic skills and habits. Over time, teens may need to understand the ins and outs of investing, dividends, and compounding interest, but it is important to focus first on areas where they can build skills and confidence.
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Content last reviewed on July 2, 2019