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Kids and Money: The Teenage Years

By Erik Folgate

This week we’ve been talking about kids and money. Don’t gloss over these articles, even if you don’t have kids, because you most likely will someday. Lack of financial education is the number one reason why we have so much credit card debt and outrageous foreclosure statistics as a nation. We don’t receive financial education as young children, as teenagers, or as college students. Schools figure that parents will teach their kids how to handle money, but the the problem is that many parents don’t know how to handle their own money. Parents figure that schools will teach kids how to handle money. So, there’s an obvious deficiet of financial education in our country, and the only organizations that do give out free financial education are credit card companies. Can you guess how they teach how to handle money? It starts and ends with a lot of plastic.

Teenagers are money hungry. They LOVE money, but they love DOING stuff that costs money even more. They’ll milk you for everything you’ve got if you aren’t careful. Here are four tips to help teenagers learn to handle money. If your children have not learned the concept of working to get more money, then this is the last chance you have to help learn about working hard to make money.

  1. Cash is King. I recommend not introducing plastic of any kind to teenagers, because they will immediatley start associating payinth plg for things with plastic. They’ll never experience the feeling of handing over their money to buy something they want or need. When you pay with plastic, whether its a debit card or a credit card, the experience numbs you to what it really feels like to pay with cash. Obviously, don’t let your kid walk around with a wad of cash like a drug dealer, but getting them a debit card could be detrimental to helping them learn the value of a dollar.
  2. Tell Them to Get a Job. Your teenagers want much more than they did two or three years ago. Not only do they want new clothes and new electronics, but they want to go out and have fun. They’re going to concerts, sporting events, and buying gifts for their friends. This comes at a premium price. If they want to do all of these things, they need to go and get a job. They can work 20 hours, do well in school, AND make enough money to support all of his or her entertainment desires. Driving and owning a car is another huge expense that should not be completely funded by the parent. If you want to pay for the insurance, that’s cool, but paying for their gas is a little overboard. If they want to drive all over the city, then they should pay for that luxury.
  3. Teach Them About Entrepreneurship. Once your teenager has shown interest in getting a job to make some extra money, introduce to them the concept of starting their own business to make extra money. Explai to them the benefits of owning a business such as schedule flexibility and limitless income. This will excite them, but give the good with the bad. Before they start their own business, explain to them that it’s a huge commitment and responsibility. Lawn care, selling crafts online, baby sitting, professionally organizing homes and garages, and computer technical support are all businesses that teenagers can start and make a great deal of money doing it.
  4. Teach Them To Be Givers. Teenagers start grasping the notion of doing good in society, and they often embrace the role of giving and doing good to others. If you can teach your child to be a strong giver in their adult years, you will help them develop a personality trait that they will cherish forever. Encourage your children to tithe their income if you are Christians and/or help them pick a charity to start giving to on a regular basis.

For those of you with teenagers, good luck. I was one myself just 8 years ago. I wish that my parents would have taught me to be an entrepreneur earlier in life and to stay away from credit cards. It took until my senior year of college to figure out how to handle money, so start early with your teenager. You’ll save them thousands of dollars in college and their early adult life.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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  • http://creditmomblog.com CreditMom

    I appreciate your post. i have one 14 y/o and 10 y/o twins. I just put the 14 y/o on a budget. I decided to pay him weekly on Sunday’s so he would learn how to stretch the money for weekend activities. His allowance is tied into chores. If he doesn’t do a chore he loses $5 off the next week. So this is week 2. He missed 2 chores on week 1. He therefore lost $10 off of week 2. Then he wanted to go out Friday night and only had $8 left….here was my response, “Oh well, next time budget your money…and there are no advances”. Oh and he also has to put $10 a week into savings!

    Kids need to learn. I’m actually glad this happened. He will be more cautious in the future because I can assure you he is not happy about staying home!

  • http://madsaver.com Mac

    Well spoken. Thankfully I have a few more years (maybe a decade) before I have a money hungry teenager. Wonder if people will still accept cash in 2020? Or will plastic be the only way to pay? Not sure, but I hope not. I very much agree that they need to learn the value of money, and credit card won’t do it. Glad my parents taught me well and forced to me to work if I was going to get all the stuff I wanted. I did work and earned a computer & a car by the time I was 17. Worth the effort, though next time I’d pass on the car!

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