By: Pamela Yellen
When it comes to raising money-savvy teens, one of the best tools available to parents is to tap into their children’s natural desire for more independence. Teens aren’t interested in learning about money to become “financially responsible adults.” They’re interested in gaining more autonomy and more freedom.
Teens are starting to decide who they want to be and how they want to live. They want to be independent and stand on their own two feet. If you connect becoming financially savvy with becoming more independent, they’ll be extremely motivated to learn. Here are some specific lessons parents can provide:
- More Money Autonomy
By about the seventh grade, kids are more sophisticated about decision-making, so they’re able to manage money more effectively. Allowances should now cover some needs as well as wants. For example, you can have your teenager pay for school lunches, birthday gifts, even school clothes. Make sure your child’s allowance is sufficient to handle these expenses and that they are still expected to do basic chores to receive it. And allow them to make mistakes! If your seventh grader blows all of her lunch money on Monday, let her make peanut butter sandwiches to take to school for the rest of the week. That will create a much more memorable lesson than bailing her out!
- Getting Their First Job
Most teens know that having a job and making money and being independent come as a package deal. They’re starting to think in more concrete terms about their future. They’re starting to assess their personal abilities and interests and how those relate to specific occupations. Many teens are eager to get experience outside of school and family. But they don’t have a clue about how to land a job! Show them how to research job openings and how to decipher job descriptions. Discuss job applications and the importance of putting their best foot forward while remaining honest about their skills and experience. Prepare your teen for interviews by explaining the interview process and what recruiters look for.
- Credit and Credit Cards
The Credit CARD Act of 2009 prohibits anyone under 21 from getting a credit card unless a parent, guardian, or spouse is willing to cosign or the underage person has proof of sufficient income to cover the credit obligation. It’s great that we no longer have credit card companies flooding college campuses to entice students into debt with pizza and T-shirts! Yet, how can we teach children about credit if they can’t experience it? There are several options: Prepaid debit cards, cosigning on a card for them, adding them to your card – there are pros and cons of each. A good place to start is to set your teen up with a checking account and see how well they manage the money within it. When they’re ready to get a credit card, make sure they get in the habit of paying off the balance every month to retain the privilege!
- Their Plan B Fund
Do you remember back when you were a teenager, how you felt immortal and invincible? The bad things that happened to other people were never going to happen to you. A rainy day fund or savings account won’t sound very important to a teenager who believes their weather will always be sunny. But when they really stop to think about it, most teens can understand the value of having a “Plan B” to fall back on when things turn out differently than anticipated. Having a “Plan B” can help them feel smart, prepared, and confident – no matter what happens. Help your teen imagine good and bad things that could happen unexpectedly – and cost money! Maybe Taylor Swift actually accepts his Instagram invitation to the prom! Maybe her three best friends all have birthdays in the same month! Have them set up a Plan B account and contribute to it on a regular basis. It will take just one “emergency” that they can – or can’t – cover to help them see the wisdom of this fund.
Helping your teenager become financially savvy is a precious, and necessary gift. And it’s one you have the capacity to give.
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