Ten Money Management Tips for Teenagers

When your children reach that magical year of 13 they transform themselves into a teen. These years between 13 and 18 are the years when you as a parent need to really start teaching money management in full gear. This is the time they will start bringing in more money and developing habits that will affect them for the rest of their life.

Following are the Real Life Money Management Teen Money Management Tips:

1. Develop the habit of budgeting, this is a vital habit to develop for good teen money management. No matter how much money your teen is bringing in have them do a budget even if it is as simple as a spreadsheet budget or in a ledger book.
2. Get them on the 10-70-20 Plan for teens. Since they are living at home and probably have transportation provided by their parents they can put their savings in overdrive. They don’t need 70% of their income to live as the 10-20-70 Plan calls for, because of the support they are getting from their parents. This way they can save to pay cash for their car and have substantial savings for college.
3. Don’t just teach them to earn money with a job. Teach them to make their money work for them through some investments. They should be saving a lot of their income at this point. Have them create an emergency fund in a money market account, create a Educational Savings Account, and buy into some safe mutual funds. This will educate them in the value of having their money work for them.
4. If they use a credit card do it with discipline. Have a credit card with a credit limit of $500 or less. Use it sparingly and pay it off each month. This will help them built a good credit rating, which can come in handy after college when they purchase a house. It is also beneficial to have a good credit rating when seeking employment. Just be careful and let them develop good credit habits not bad ones.
5. When a teen, no matter their plans after high school save money back for a secondary education. Whether that is vocational, professional, or college they need to be financially prepared. So even if they say they are not pursuing a secondary education have them save for it. If they end up not going to college they will be thankful they saved for it. So don’t let statements like, “I’m going into the military when I graduate” or similar ones keep them from saving for college.
6. Have them save and pay cash for their automobile. Not getting into debt is vital to good teen money management. Parents should help them get to that job so they can save and pay cash for their transportation. They will not regret this short term sacrifice and it will prevent them from getting into that habit of borrowing for things they feel they need. If they just have to borrow for a car, pay it off in less than a year. If they can’t they are probably buying too much car for their situation.
7. Make sure money management is a part of their education. They can do this by taking accounting or financial management courses in high school or taking financial related classes at the local Vocational School. No matter what they plan for their career have them learn something about money at this age. If nothing is available there are numerous online money management courses.
8. Parents don’t spoil teenagers by giving them everything they want. They need to earn what they get. Yes, you need to support them just don’t spoil them. This is a great time for them learning to differentiate between wants and needs.
9. Be on guard for negative outside influences. Teach them to not keep up with their peers. When their friend goes out and buys that $20,000 shiny new car with a big monthly payment don’t let them be influenced by these poor financial choices.
10. Be a part of the family. Often times the teen years can be a time of rebellion. Don’t let this happen. If teens spend most of their time with their family they can save even more for their future and be set once they leave home. Too many times teens depart from their family and spend everything they earn during their teen years.

Follow these ten tips and your teen money management will come easy. They will be set for the next phase of their lives and develop habits that are financially freeing from the get go. Teach them about the Real Life Money Management Guiding Principles by setting the example yourself.