Teaching Teens About Managing Money

Question: What can I do to help my 15 year-old to learn about budgeting and saving?

Right now he has no expenses and no experience in managing money. Is it too late? He works a little, and makes anywhere between $15 to $85 per week depending on his schedule. I have him saving half of it, but not much in guidelines otherwise.

Answer: Right now is the best time to start — and you can create lots of situations to motivate him. At this age, driving a car, buying cool clothes, having a cell phone and doing fun activities provide great opportunities for working teens to learn to manage their money. If we as parents cover all of their expenses and allow them to spend all of their earnings on frivolous things, we are not preparing them for adult life — things like mortgages, insurance, braces and toilet plungers.

This may not be popular, but if our own kids want to drive, they pay for their insurance and they drive our cars. We start teaching our kids to manage money using four cash envelopes for the following categories: Give, Save, Spend and Clothes. As they add more earnings and more activities, we add envelopes such as Gifts, Insurance, Scouts, etc.

You will be surprised that as your teen becomes more responsible with his money, he’ll actually feel better about himself and develop a calm sense of self-assurance. For more details read the kids and money chapter in our book or order a copy of our “Teaching Kids About Money Isn’t Kids’ Stuff” audio CD from our web site. Or order our MoneySmart Kids Financial Training Kit and help your kids learn to manage their own money.