Does your teenager understand money concepts?
04/10/2025
If you have teenagers, you may feel hopeless in your efforts to help your kids increase their knowledge about money and you might be justified in being concerned about what will happen when they are on their own. Don’t let this fear keep you from taking action to help your teenagers become smarter about money.
Why is it so important for parents to help their teenagers make better money decisions?
If your teenagers are making poor money decisions, they likely will have to suffer some major financial setback before they change their behaviors. Often, this major setback can have an impact on the parents’ financial situation as you could be a co-signer or otherwise responsible for helping them financially. As a parent, you have more than parental concern when it comes to the financial situation of your kids. You often have a financial commitment as well. Making smart decisions early has proven to be most effective in creating lifetime habits of making better money choices.
What are the most important concepts for teenagers to understand about financial matters?
There are three important concepts for teenagers to understand about money. It starts with learning to have a financial plan. Maybe not a budget, but at least understanding where they plan to spend money in the short term. Second, they need to understand the concept of saving for future purchases or opportunities. And finally, they need to understand that they won’t always be able to do what others in their peer group might be able to do or have. A good example is the type of car they drive or if they even get a separate car to drive during high school and college years. Your teen needs to be comfortable living the lifestyle they can afford.
How can parents help teens become better at financial decision making?
Give them more financial responsibility for their daily financial needs. Instead of buying their clothes, gas, and school lunch, give them the money you are willing to spend for these items and let them make the decisions. This will be their first opportunity to make a true spending plan and the freedom to decide how and when to spend their own money. They will make mistakes, and you need to let them experience the consequences of these poor spending decisions. They will remember these “painful at the time” consequences and that will influence their later decisions. Learning by doing is the best way to reinforce the most important habits. One of the most important ways parents can help their kids is to talk about money with them including any money mistakes.
Are there any important concepts for graduating high school students to understand?
Whether they are going to college, trade school, or going straight to the workforce, it’s important for high school graduates to understand the following: when to stop spending because they don’t have the money; the true costs of living on their own from food to other expenses; how to make their money go further by looking for deals, waiting for sales, and being frugal; and most importantly, that waiting to purchase and saving for something is better than using credit or all of their savings. Most high school graduates don’t always practice these concepts and are surprised how fast their money goes when they have more financial responsibility.