Teaching Teens How to Manage Money

Today’s teenagers have a lot to handle — from worrying about social media, to keeping up college-worthy grades, to making the varsity team — their schedules are jam-packed. Add to the mix, a job market that’s not as welcoming as it was in the past, and you’ve got all the ingredients for a challenging situation. There are fewer jobs for teens, and because of this, they are harder to land.

So how can you prepare your teen to be a contributing member of society, with responsible financial habits? Start by letting them know how important it is to be smart about managing money. It’s an essential first step toward becoming a responsible adult. Consider applying the strategies below so that when they do enter the workforce and get their first paycheck, they’ll make the most of their hard-earned money.

Be persistent. Kids tend to live in the moment and be preoccupied with friends, so conversations about something as boring as a budget can make them want to stop listening. But don’t give up. Insist on helping your kids understand money basics — how it’s earned (no, it doesn’t grow on trees), where it goes (taxes are an adult reality) and what happens when it’s gone (savings are a good way to build a buffer). Encourage questions — even uncomfortable ones, such as, how much do you make? Are we in debt? — to build trust and gradually introduce adult realities. If your teen isn’t willing to talk, turn to the experts. Find a financial book aimed at teens or simply write down some of the financial principals and expectations you want to impart and make it required reading.

Set limits. Handing your teen a blank check or limitless credit card is unwise for many reasons. Spending without limitations tells kids they are immune from responsibility. An endless supply of fun money will prevent your teen from taking steps to reach financial independence by reinforcing reliance on your resources. Conversely, creating a budget with built-in limits teaches teens to be better stewards of the money you entrust to them. A budget provides accountability and can create a greater sense of security, because it puts your teen in charge. If you teach your teen how to live within a budget, you give them a gift that keeps giving into adulthood.

Check out the latest apps. Today’s teens are tech savvy, so why not meet them where they prefer to live? Smart phones and tablets are valuable teaching tools, even if they’re primarily used for texting and connecting with friends. Look for apps that track spending or provide financial coaching. Many are free or available for a nominal fee. If the financial talks remain stalled, try sending your child a link to an article on a financial topic, or a pertinent YouTube video as a conversation starter. You may just discover that they’re open to discussing these topics via text or email.

Although it may feel challenging at times, teaching your teens about money is worthwhile. And who knows, they may even thank you for it one day.

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Paul Fragala, CFP®, CIMA®, is a Private Wealth Advisor with Ameriprise Financial Services, Inc. in Andover, MA.  He specializes in fee-based financial planning and asset management strategies and has been in practice for 20 years. To contact him: www.paulfragala.com, 76 Main St., Andover, MA, (978)-474-9900.

Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.

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