Cents and Sensibility

5 Tips on Raising Money-Savvy Teens

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If you’ve ever told your teen “money doesn’t grow on trees,” you may need to read these five tips on raising money-savvy teenagers. It’s easier than you think to help your teens learn and appreciate the value of money.

The best way to teach them is to give them hands on learning experiences. Consider the following tips:

1. Give Them Money of Their Own: Teens tend to appreciate the real-world value of products quickly when the money to pay for them comes from their own pockets. You can start by giving your teen allowances for chores, good grades, and other accomplishments. Whatever reasoning you use to give your teens money, the allowance should continue to increase as their responsibilities increase. For example, start giving them money to cover their school lunches, then gradually increase their responsibilities until they’re able to purchase their own clothing. This will help teach them how to not only budget, but spend wisely as well.

2. Teach Your Teen To Save: Help your teen open a savings account, and teach them how the bank pays interest on it. Try this incentive for your child to save money aggressively: Match whatever he or she saves, and have an ultimate goal and timeline for the money. For example, you can match whatever your teen saves for a year to purchase a car.

3. College Prep: I highly recommend that saving for college should start when a children are born. But, once your children become teens, start talking to them about college, college expenses, and the role they will play in helping to pay for their college education. Before they start filling out applications and scholarships, encourage your teen to work part-time and direct deposit some of their paycheck into a college fund. Have them to research various colleges’ tuition and fees and begin to budget for incidentals like text books and dorm costs.

4. Make a Dollar Stretch: Even your teen can learn how to stretch a dollar. Get them engaged in your financial processes regarding paying bills, balancing a check book and shopping smart. Don’t make money management a secret in your household. Once you give your teen an allowance, make your kid responsible for sticking to his or her budget, spending money wisely, and learning how to shop smart. If your teen has a part-time job, he or she should pitch in, too, by saving for prom and graduation expenses. Set realistic budgets and involve your teen in the buying process. Set realistic goals and expectations to ensure your child don’t simply waste money and uses every dollar wisely.

5. Identify Needs vs. Wants: Since some teenagers think of credit cards as free money, remind them that when they charge something, it’s like taking out a loan and paying interest on it. Therefore, credit cards should be used to meet immediate needs (in urgent circumstances and if they don’t have cash to use). Some teenagers think it’s okay to borrow against future income to go on vacations or buy designer clothing. As a parent, you can set the expectations upfront and remind them to identify true needs, rather than wants.


About Dr. Karen Ratliff

Karen Ratliff

Credit: Dr. Karen Ratliff

Dr. Ratliff is a certified life coach and professional educator, assisting many people in accomplishing financial, career, and educational goals.  She is also the author of “Tightening Your Bootstraps: 104 Tips to Kick Your Debt to the Curb Now.” Keep up with her budgetary advice via Twitter @drkarenratliff  her website at, and her facebook fanpage “Financially Focused with Dr. Karen Ratliff.”