Personal Finance for Teenagers

Phones. Clothes. Music. Electronics.

They’re pretty much the same things teenagers have always wanted. And many of those items can come with a very expensive price tag. While we don’t want to deprive our kids, it’s important to teach them how to manage their money.

The old-fashioned allowance goes high-tech.  Unless your teen has a job, it will be nearly impossible for him/her to learn about spending without actually having money. Loading a monthly allowance on a prepaid debit card can give your teen practical knowledge about budgeting and spending. A good rule of thumb for both adults and teens is the 40/30/20/10 savings plan.

• Forty percent of the allowance is for spending,
• 30 percent goes towards short-term savings goals (a smartphone, for example),
• 20 percent towards tong-term savings goals (such as college or a car),
• and the final 10 percent goes to charity.

Let your teen in on the family finances.   Show them how much a car costs for one month. A trip to the grocery store to purchase one meal for the family with a set amount of cash can be a real eye-opener.  

Encourage your teen to research.   Whenever you’re planning to make a purchase, ask your teen to go online and look for the best buy. If you’re planning a vacation, involve your teenager with the budget and hotel, plane, and car reservations. 

While teaching your teen about money might not make them a multi-millionaire, it can give them a head-start to a brighter financial future.