Teen Finances

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Teen Finances

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My teenager constantly asks us to buy expensive things for him and says he will pay us back. The problem is he rarely does. How should we react to his requests?

Does your son understand interest rates, know that ATMs charge fees, or have the skill to balance a check book? Did you know that almost 1/3 of all teens have some form of debt (Schwab, 2007 Survey)? Teens are intelligent, but they still need mom and dad to help guide them toward fiscal responsibility.


Most cash conflicts occur as impulsive adolescents struggle to understand wants versus needs. They often cajole their parents for money to buy some “must have” item. Don’t give into their pleas; rather take the opportunity to educate and inform you brand seeking offspring about the value of a dollar.
Start by discussing cash saving strategies. Teens acquire money through jobs, allowances, and gifts. Your son should develop a pay himself first attitude by placing a predetermined amount into a special account. Spending is part of earning but should typically take place only after saving has occurred.
Defining financial objectives is another essential component of teaching money management. Discuss long term needs like a college education versus short term wants like the latest video game. Set goals for both but make sure to initially save small, tangible amounts that will allow your son to experience some short term success. It is easier to save five dollars per week than 50 dollars per month.
Parents should also share real life financial lessons by including their children in household budgeting and bill paying. Most kids do not know about utility bills or understand how much money it takes to feed a family. Exposing them to these expenses will not only educate but may also result in a more contentious teen that knows how much things costs.
Lastly, teach your son to manage his own money. Give him a budget to cover his living expenses related to food, clothing, and gas. Celebrate his success but also allow him to feel the pain of a poor purchase decisions. Overspending on shoes may mean that he does not have enough money to go to the movies.
As teens enter college they become eligible for credit cards, loans, and other payment plans. Valuable life lessons may be learned the hard way if your teen does not learn how to manage his spending.
It is better to create a debt of gratitude for teaching life-long financial lessons, than to have you children in dept to creditors. Years from now, a parent should hope their children only have debts of gratitude because you taught them the value of a dollar. Let’s hope they are in dept to you for teaching them how to manage their money instead of being in dept because they spent too much.


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