When it comes to money, the expertise of most teenagers is limited to one aspect—spending it. Understandably, their money management know-how won’t improve without your help. This might not be common knowledge, but many experts believe financial literacy is a basic parental responsibility, right up there with shelter, clothing, and food.
7 Money Management Tips for Teenagers
Fortunately, teaching your teens about money management nowadays has never been easier. Parents now have access to debit cards for kids and other apps designed to help teens manage their money better. There are also apps that focus on investing for teens to help your kids learn the basics of investing at a young age. We’re excited to share our top money management tips for teenagers with you.
Money Management for Teens: Top Tips
Starting your teens’ money management training early is considered one of the best ways to prepare them to be financially responsible when they are out there in the real world. Below are seven money management tips that can help get their financial journey off to a great start:
Money Management Tip #1: Be a good example.
Your teens consider you their role model so make sure you are a good one. Show them you practice smart money management by making good financial decisions. You can show your teens wise money management by prioritizing what you need over what you want, creating a practical family budget, organizing and paying your bills on time, and consistently saving a portion of your money each month.
Money Management Tip #2: Open a bank account for them.
To ensure you can supervise their spending while still giving them independence, consider opening a checking account. You need to have joint account holder status and complete access so you can guide them accordingly. It would also be a great idea to allow your teens to monitor and manage their accounts using a smartphone.
Money Management Tip #3: Put them in charge.
Rather than providing clothing and other basics for your teens, it would be ideal if you could allot a certain amount each month and put them in charge. This strategy can teach them how to live within a budget. Also, putting them in charge of a certain amount of money can help them resist impulse purchases.
Money Management Tip #4: Teach them some credit smarts.
The sooner your teens know about the consequences of a bad credit score, the better. It is important that they know a damaged credit score can significantly limit their ability to qualify for auto loans, apartment leases, and mortgages. It would also be a good idea to show them your credit cards or mortgage statement to teach them the fundamentals of credit.
Money Management Tip #5: Help them create a monthly budget.
A monthly budget can help teach your teens how to control their spending and prioritize important expenses. Budgeting will also teach them how to compare their income with their monthly expenses. From there, they can also easily identify costs they need to cut down. Make sure you also teach them how to stick to their budget accordingly.
Money Management Tip #6: Use money management apps.
Nowadays, there’s no shortage of money management apps designed to help them set a budget and monitor their money and spending. Also, using an app rather than a spreadsheet will help your kids stay organized. Make sure to pick an app that allows them to save, track their expenses, and stick to a budget. Some apps also have a reward system when your teens reach a certain milestone.
Money Management Tip #7: Plant a retirement seed.
Planning for their retirement may be the farthest thing from your teens’ minds right now. However, it is ideal to help them understand and look forward to saving early for their retirement. Show them that even a modest amount can have a massive impact on their future.
The earlier they understand that retirement is one of their biggest expenses, the better. With time on their side, it would be great to take advantage of the power of compound earnings. The earlier they start, the more they will have. If your teens are already earning income, consider opening a Roth IRA.
The more you guide your teenagers about proper money management, the better their decisions and the better off they will be financially. Besides, helping your teens create a secure financial future for themselves is also one of the most rewarding things you can do as a parent.
About the Writer: Samantha Green is the Content Marketing Strategist for the MCA award-winning app, BusyKid, the first and only chore and allowance platform where kids can earn, save, share, spend, and invest their allowance. A mom of two, she enjoys spending time with her kids and reading books to them.