Helping Teens Make Wise Money Decisions

It’s probably a good thing that we were all teenagers once, because it helps us to remember just what it was like being that age. Doesn’t it all seem rather silly now? Our biggest financial concerns may have been whether to spend our hard earned money on fixing up our beater car (if we were lucky enough to have one) or taking our girlfriend to the movies. And it sure wasn’t dad who was going to make the decision for us!

But now that you think back on it, there may have been some good advice that the old man was giving you regarding where those dollars went and why. And while he probably didn’t think any of it was getting through your thick skull, maybe a little managed to sink in, especially after you made the mistakes he was telling you about and saw for yourself exactly what he meant.

Now that you’re all grown up with kids of your own, you may be wondering how to help your teenage boy make wise money decisions and avoid some of the mistakes you made or take advantage of situations that you may have missed out upon. If that’s the case, here are a few tips that might help you with your endeavors.

Healthy Communication
Good communication is probably one of the most difficult aspects of a relationship with a teenager. Whether you’re discussing common everyday issues, school, money, or girls, it may seem as if your teen just isn’t listening. And in all likelihood, he might not be…at least not listening well. This may not be because he doesn’t care about what you’re saying, but he probably just thinks he knows his life better than you and can make better decisions, and in some cases, he might be right. This doesn’t mean that you shouldn’t try to at least plant the seeds of what you want to get through to him and hope that they will grow along with his life experiences.

Part of maintaining a healthy line of communication with your teen when it comes to money, is honesty. Being secretive regarding finances and money is a good way to deter your teen from approaching you and learning from you about money related issues. Consider letting him watch you when you’re working with your family budget or paying bills, and let him sit down with you and watch, or pay a few himself (with your money of course). By not offering explanations as to why and how you make money decisions, you risk your teen making the same mistakes you once made.

While every teen is different, a common thread that often runs among them is that they hate to be told what to do. Suggestions are great. Ideas are fine. But you tell them that they have to do something and you had better be prepared for it not to get done. While all teens aren’t necessarily this way, it helps to have a backup plan for getting through to them just in case. Therefore, think of other ways to explain to your teen how better to manage money by way of examples. A great way to do this is to set the example yourself by way of proper personal finance habits. Leading by example can help teach your teen without having to preach to him. You can also tell stories of mistakes you have made. Doing so can relate valuable lessons while teaching him that adults aren’t always perfect either when it comes to money.

Test Him
No, testing him doesn’t mean sitting him down at the desk and administering a money management test. There are other, more constructive ways to test your teen without necessarily making it feel like a test or that you don’t trust his personal finance abilities. Setting your teen up with a personal savings account, checking account or possibly even a credit card with a minimal available balance (that he must pay off himself each month) can be perfect ways to test his money skills. This can also give him the chance to test himself and learn about various aspects of money management. By reviewing monthly statements with him and discussing account balances, interest rates and other significant factors found on these statements, you can watch his progress while helping to guide him with his financial education.

The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. For financial advice, readers should consult a licensed financial advisor. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.