Teaching Teen Moneymakers Not to Spend it All at Once

Guiding money-making teens down the path to financial stability is much easier if they have had some experience with handling money in their early teen years, but even if they have had absolutely no responsibilities up to this point all is not lost.

If your teen has not previously been in control of their wallet, they may view bringing in a little money as a rush of freedom and although they will never admit it, they will need council on how to ensure that it lasts… at least until the next pay day.

It is important though to be sensitive in your approach. Your teen may see any advice as interference and try to drown out your words of wisdom. The following tips can help you to get the message across without facing too much resistance:

Lead by Example

Encourage your teenager to sit with you while you go through the motions of preparing the family monthly budget. Try not to turn it into a tutorial, but remain conversational and keep the mood light. You can probably comment on how the cost of living has climbed since they were a baby and pull them in to have a look at the expense categories. It’s also best to show them how to tie a budget into real life goals, so they can see that saving is not arbitrary but rather a focused attempt to achieve dreams. Before you know it they will be eating out of your hand and actually asking questions about how things are done.

Help them Open a Checking Account

Assuming your teenager already has a savings account at the bank from an earlier age offer to take them in to open a checking account. Make the graduation from savings account to checking account seem like a kind of coming of age experience, and take the opportunity to give them some pointers on how to reconcile their spending at the end of the month. Offer to help them with it for the first couple of months. Tell them they can think of this time period as riding a bike with training wheels, it may be possible to learn without them, but they sure make the process less dangerous.

Highlight the Importance of Charity

When your child starts to earn an income it is a great opportunity to talk to them about the importance of giving back. It doesn’t necessarily have to come from a religious perspective, although it certainly can, but let them know that putting some good out into the world ensures that they are setting the wheels of positive reciprocity in motion. This doesn’t even have to be phrased as a question, but rather bring it up as if it were the natural and expected thing to do by asking “So have you decided what charity you will be supporting?” as opposed to “Now that you are working you need to give something charity.” Engaging them like this catches them off guard and is more likely to spark a constructive conversation, than if the topic were to be broached like a lecture series.

Instill the Lesson of Delayed Gratification

While this is best taught at a younger age it is never too late to try. If your teenager is on the verge of blowing their entire week’s earnings on a frivolous item, instead of flying off the handle, think of something that you know they would like to have. Maybe it’s a car or a new music system. Whatever the item, use this to drive home the concept of spending it all now to get a small thrill as opposed to saving something up each month to get something really satisfying. This takes time to digest and they may falter but stick to the message and remind them of it the following month when they are still unable to afford the thing they crave because of poor spending habits.

Talk to them about Credit Cards

Credit card companies love to target teenagers precisely because they are a vulnerable group, but also because they are also at the age when they are likely to be bailed out by parents or guardians. Make sure they are aware of the charges and use an online calculator to highlight what the interest payment will be on an item if left unpaid for a month or even six months. Educating your teen about the proper use of plastic can save you a bundle both financially and emotionally.

Consider Matching their Contributions

Finally, encourage your teen to save. This is probably the best thing you can do for them as a parent to shape their financial future. Make sure they know that the earlier they start to save, the better off they will be. Take advantage of online calculators to bring home the difference in accumulated savings from someone who starts stashing at 16 as opposed to starting at 21. Then make those numbers real by tying them to material items like a house or a car.

The key to influencing teenagers is keeping the lines of communication open. Ask them questions and constantly monitor their performance from a safe distance. The teen years are extremely important and getting things right now can give them a firm footing for the trials of their early twenties when even more responsibilities crop up.