When economists look at issues like spending power, teenagers stand out as a financial force to be reckoned with, and this is obvious if you look at advertising. Easily swayed by factors like peer pressure and perceived “coolness,” teens are a market that’s just there to be exploited, and that’s reason enough for parents to be concerned. Add to that the risk of giving your teen access to their own money to spend as they please and this can sound like a disaster waiting to happen.
Of course, deciding your teen isn’t ready to handle their own finances, even to a limited extent, is a choice that comes with its own risks, namely that they won’t learn the necessary lessons that will enable them to take on the task when they leave home to live independently, so teaching them these skills is really non-negotiable.
If you’re feeling nervous about the prospect, though, you’re not alone, and luckily there are a lot of ways you can start small.
Practice Saving Together
Economic measures suggest the average teen spends over $2000 a year, but just because this is how the math shakes out at a population level doesn’t mean your teen does or that you can imagine having that kind of disposable income for your kids to spend.
In fact, many families with teens are working hard to save money, either out of necessity or because they want to make sure they have a safety net for medical issues, for college, or for another reason – and this is a great place to get your teen involved.
By their nature, at a neurological level, saving can be hard for teens. They lack the ability to plan for the long-term and manage their impulses because their frontal lobes aren’t fully developed yet, and that’s okay.
That’s why, as a parent, your guidance is so important. If you’re trying to save money for your family, engage your teen in comparison shopping, helping with making shopping lists and budgets, and exploring low- or no-cost family excursions. Make it fun and consider setting aside a different savings for your family to enjoy together, such as money for a fun day trip, so your teen can experience the satisfaction of saving successfully.
Practice Paying With Cards
It used to be a lot easier for parents to teach their teens to budget or even for young adults on their own to manage their money because if you didn’t have the cash in your wallet, then you were out of luck. You had to plan really carefully. In the age of ubiquitous credit and debit use, though, this skill can seem quaint.
Help your teen practice managing their balance, saving money, and spending wisely with a teen debit card. These cards offer immediate spending alerts for parents, cash back rewards like traditional cards, and easy oversight to make sure your teen isn’t getting themselves into financial trouble.
What about credit cards? Generally, there’s no reason for your teen to have access to your credit cards or to have a credit card of their own, especially since many don’t really understand how credit works.
However, it is important that you provide some credit education, especially as your teen gets closer to leaving for college. Though it’s no longer legal for credit card companies to inundate college students with credit card applications the way they used to, students loans are often one of the first steps toward establishing a credit history.
Talk to your teen about responsible credit card use, why a credit card is different from a debit card, how interest works, and how to read a credit card offer or statement. Open discussion and a willingness to approach it without judgment is a good way to keep your teen from surreptitiously applying for a credit card behind your back once they turn 18. It’s also a good way to keep them from digging themselves deep into debt before they have much income.
Even if you don’t think your teen is ready to manage their own money, it’s important to start letting them practice small measures of independence, even if that’s with very small amounts of money. Ideally, though, you’ll have started tackling financial issues early on and building towards understanding and self-sufficiency so that you can be confident your teen has at least some basic money management skills, even if they’re still a work in progress.