Teens and Money

In many ways, money is a taboo topic in our culture. Most of us don’t dare talk about how much money we make or spend. We hold financial information close to the chest, as a very private matter. So, when it comes to discussing money and teaching our kids about finances, it can be a challenge. From a young age, kids begin to understand that in order to get the things they want or need, money is required. However, the complexities of saving, giving, and investing money do not come naturally to a child and must be taught and reinforced over time.

As a financial planner, parents often have questions about financially educating their teens  and how to best prepare them for the future. It’s not uncommon for teens to leave home for college or work without learning basic finance-related skills (budgeting, paying bills, check writing, use of credit, etc.). Though it may feel difficult, parents need to engage their teens in conversation about money and help them develop mindsets and habits to prepare them for their future. Here are four big ideas I emphasize with parents.

Place Value on Work

We’ve all heard (and likely said), “Money doesn’t grow on trees.” One of the most basic and central tenets of developing a healthy mentality for finances is for parents to teach their children that money is earned. Young people today must understand that we work for what we want, it is not simply given to us. This is not to speak against allowances, that is, parents regularly giving their children a set amount of money. Receiving an allowance that is tied to chores and/or help around the house can foster healthy money habits in younger children. As our children grow older, more independent, and more capable as tweens and teens, it becomes increasingly important to instill the concept of earning money. Whether it is a summer job, part-time work during the school year, or even extra tasks around the home, parents need to help their teens connect the dots between hard work and earning money.

Create Habits

Just as parents teach their children to care for their physical well-being (brushing teeth, eating a balanced diet, staying active), parents need to instill habits that ensure their children’s financial well-being as they mature. As previously mentioned, allowances can be an effective way to develop good habits in our children. Dave Ramsey, creator of Financial Peace University, offers a children’s curriculum that addresses four actions: work, spend, save, and give. These are basic habits children can begin to develop early on. These habits become especially important in the teen years as older children begin to make more of their own money. One simple way to do this is to keep separate envelopes in which they divide their money--one for spending, one for saving, one for giving. For teenagers, I recommend parents and students open a joint checking/savings account and have regular conversations about how they are spending, saving, and giving to others.

Set Priorities

As teens learn the habits of working, spending, saving, and giving, parents can engage in deeper conversations with them about setting priorities. Creating a simple budget can be a useful tool in developing and maintaining financial priorities. Some talking points for each of these categories may include:

Spending

• What is a healthy amount of money to spend (weekly, monthly)
• The difference between wants and needs; how these are represented in our spending

Saving

• What is a healthy percentage of income to put towards savings
• Short-term savings (i.e. “I want to save up for a new phone.”) versus long-term savings (i.e. “I need to set aside some money for my future.”)
• What credit is and how to build it
• Healthy investment opportunities

Giving

• The importance of giving
• What is a healthy percentage of income to give
• Organizations or causes of personal interest to your child

Be an Example

Talking with teens about their financial priorities is important and will prove helpful to them as they gain independence. However, conversations alone are not enough. We all know that actions speak louder than words, and teaching our kids about financial health is no exception. As with every other area of life, parents must lead by example when it comes to finances. Teens observe and absorb their parents' spending, saving, and giving habits. Whatever priorities parents model in their own lives are indirectly communicated to children young and old. Kids can pick up on negative habits, like shopping too frequently and/or routinely talking about the things you want to buy (insinuating that you are not happy with what you already have). Kids can also pick up on positive habits, like living within your means, being content with what God has provided, and living generously to share the love of Christ.

Whatever our financial situation and habits are—good and bad—our kids see them and internalize them. While this reality may feel like a weighty responsibility, finances are also a unique opportunity for parents to instill faith-based values in their children. Parents can relay truths about stewardship, trusting God as provider, working as if unto the LORD, storing treasures in Heaven, relating to God as the giver of all good things, living life generously, and so much more. Providing this framework for financial understanding, combined with maintaining dialogue and implementing practical ways to develop healthy financial habits, will certainly serve our teens well as they enter adulthood. So that ultimately they will know the power, comfort, and purpose embedded in Matthew 6:33, “But seek first the kingdom of God and his righteousness, and all these things will be added to you.”