How to Teach Teens about Money Management

How to Teach Teens about Money Management

Sound advice indicates that it is beneficial to have an understanding of the fundamentals of personal finance—and the earlier a person can grasp these concepts, the better. For parents of teenagers, getting them acquainted with money management is a challenge that is well worth the effort. Teens and young adults who grasp key money concepts and regularly apply them in their lives will be at a distinct advantage when it comes to facing life’s challenges.

Whether it is introducing your teen to a bank account or helping your recent graduate navigate the ins and outs of credit, parents can serve as a resource for understanding and employing sound money management skills. Keep reading to find out why money management is important for teens and young adults and how parents can make learning about money less challenging.

Introduce Them to Earning and Saving Early

Ideally, parents will have introduced some money concepts to their children at an early age, but this doesn’t always happen. Before the teen years, money management can be taught in simple terms, such as maintaining a spare change jar or using a piggy bank. The younger years are also a good time to teach basics like adding and subtracting and understanding denominations.


As children enter their adolescent years, financial education can be taken up a notch. Try giving your teen jobs to do, such as washing the family car or doing yard work, and explain how they will be compensated. Instead of simply referring to the work as chores, make it seem as close to real employment as possible. Set specific hours for the work to be completed and help your child understand how much they are earning during the allotted time. This will prove invaluable as they enter the workforce. It will help them understand compensation structures and whether a job’s compensation is commensurate with their experience.

Lead by Example

As with many things as a parent, one of the best ways to impart a skill onto your child is to lead by example. Regardless of how much kids are influenced by the media or their peers, their greatest influence is usually their parents. Practicing good money management skills will show your children that you are following your own advice. This can be challenging for parents who are still struggling with their relationship with money or are having a hard time making ends meet. However, you can still learn along with your teen if your finances are still a work in progress.

According to a study led by the University of Cambridge, children pick up on the money habits of their parents as early as age 7. This means little things like arguing over money with your spouse or paying for everyday purchases with credit cards do not go unnoticed. As your children get older, they not only notice how you handle money but they also begin to internalize it. Setting a good example is the best way to combat poor money management skills as your child enters adulthood.

Encourage Big-Picture Thinking

Although discussing money management fundamentals is a good start, using concrete examples will help your teen see your advice in action. Good examples will help your teen create an effective budget and ponder their purchasing decisions when factored into their financial goals.

money saving

Younger people tend to look for instant gratification, and this can translate to a propensity to make impulse purchases. Instead of chastising your teen for wanting something new, help them make an informed decision by giving them a concrete example. For instance, if your teen sees a pair of shoes they want, help them weigh the decision to purchase by reminding them of financial goals they may have set or other items they might be saving up for. Giving your teen an example will give them a moment to pause and consider how this impulse purchase will impact their savings and long-term goals.

Introduce Your Teen to Financial Tools

As teens start to understand money more, parents should introduce them to financial tools that will make their lives easier. Start with a savings account and work with them to set goals and manage their cash flow. Have them accompany you to the bank so they can ask the banker any questions they may have and get a clear understanding of how the account functions.

Financial tools like mobile apps and online banking can also be helpful when helping your teen grasp important financial concepts. From budgeting apps that help your teen track their spending to goal-setting apps, there are plenty of options to choose from. Let your teen test out a few money management apps to see which ones are easiest to work with.

For teens who are older and will be going off to college soon, consider having a conversation about using credit responsibly. College students are typically bombarded with credit card offers, and for young adults, it can be tempting to accept these offers. However, understanding credit, credit scores, and interest rates will be essential to avoiding going into overwhelming debt. Let your teen know what to expect should they accept a credit card offer, and stress the importance of not relying heavily on credit.

Get Started

Even if you have never discussed finances with your teen or young adult, it is never too late to start. Avoid lecturing your teen; instead, have a candid conversation about money and the benefits of properly managing it. Give examples of good financial choices and strategies for building good habits.

If you are having a hard time with your finances, be candid, and use your situation as a teachable moment. If you need additional help, consider speaking to a financial advisor who can offer helpful information to both you and your teen.