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Raising Money Smart Kids-Part 4-The Teen Years

With teenagers, especially older ones, the likelihood that they are earning money outside of the home is greater. And if they aren’t at the moment, they will be soon.  Chances are they have a want-list as big as they are—from certain clothes and electronics all the way to their own cars. So, it’s best to give them a dose of real-world experience.

Keep up the work with needs versus wants, how credit works, and the balance between earning/spending/savings. If they have the means to spend, show them how to take advantage of sales and make tradeoffs to fit their budget for their needs.

If you are comfortable with it, let them see your actual household budget—what comes in, what has to go out, and where to divide the rest of it up. Show them how to manage bills, balance checkbooks, how to financially “adult” and show them how it all works. At the very least show them how to schedule their inflow and outflow of their money so they aren’t caught short in their account.

Bring them with you when you apply for a loan. Let them see the process of what’s being asked and what’s being required for you as a borrower. It’s also a great comparison-shopping experience, between different rates and terms they can see what happens when you shorten the term (higher payments, less cost overall) versus drawing it out longer (lower payments, more cost overall). It’s important they learn the world of lending—what it means to borrow, how interest works, and the importance of paying back on time.

Financial goal planning goes hand-in-hand with life goals. Distinguish between short-term goals (less than a year), mid-term goals (1-3 years), and long-term goals (3+ years). Help them with their goals and plotting out what it’ll take to reach them—both from a logistics and financial perspective.

Next week, they may be fresh out of the nest, but they’ll still be coming to you with questions. . .

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