In today’s world, teenagers face more spending choices than ever before. Malls and other shopping venues have been joined by online marketers who bring shopping into the home. As soon as teens move from high school to college they are inundated by offers of easy-to-get credit cards. It’s vital to set financial goals for teenagers early on as part of teaching them to manage their money in a responsible way.
Start early by providing teenagers with allowances. Along with the money, give the young person the responsibility for some of her expenses (lunch money, purchasing DVDs, etc.). Teach her how to budget her money so she will have enough for what she needs. When teenagers are old enough, encourage them to get a part-time job and give them more responsibility for their expenses.
Include your teenage children in the process of family financial management. Researchers have found that young people have a better grasp of financial realities if parents are open about family money matters. You can include teenagers in some family spending decisions. For example, there may be enough in your family budget for a night out at the movies or to go to a ball game but not both. Giving teens a chance to see the choices and participate in such decisions puts them on the road to learning how to make decisions as adults.
Open a checking and a savings account for your teenager. In this way, you give him the opportunity to learn the basics of managing his money. As a precaution, however, it’s usually best to make it a joint account. Talk with your teenager and work out savings goals.
Help a teenager learn long-term planning by participating in setting financial goals to pay for her own college education. A variety of decisions must be made by any family: how much can the family afford to pay for college? What are the financing options? How much needs to be saved each month? Teens will pay close attention to planning when the issue directly involves their futures.
Teach your teenager how to shop. As adults, we know that comparing prices and looking for sales are important strategies for getting the most for the money spent. For example, show teenagers how to compute unit prices on grocery products. Once they learn the basics, occasionally give them the job of doing some shopping for the family to gain real-world shopping experience.
Start your teen on the path to wise investing. There are several ways to do this. One is to open up a brokerage account and start a teen on a mutual fund investing program. There are good mutual funds that have minimums of as little as $500 and allow additional investments of $50. Another option is to talk to your bank. Many banks have programs designed to help young people get started investing. Some companies provide similar programs that allow teen s to invest, use credit, and learn how these financial tools work. A link to one online site, Bixx for Teens (Visa) is at the end of this article.