Financial Advice for Teenagers

In a few years, your teenager will be out from the comforts of your home and into the “real world.” As you well know, it’s tough out there and you will be unable to protect them from every struggle they may encounter. You can, however, help them prepare. Some of the best parental advice you can provide your teen concerns financial matters. Lack of a proper financial education will lead your “soon-to-be” adult into most of their difficult moments. Teaching them the importance of good money management while they still live under your roof will help guide them through many possible financial obstacles. Focus on starting simple and work your way to more complex financial matters.


As your teen grows older, he or she may begin to earn their own income from allowances or a part-time job. This is the perfect time to sit down with them to discuss how best to manage their finances, or to create a budget. First, you want them to track their spending for a certain period of time, usually a month. Next, go over their spending habits with them so they can see where the bulk of their income is going. Finally, help them prioritize their purchases and payments. Your teen may have a bill or two, such as for a cell phone, or you may require them to help out with family expenses. Make sure they understand that these needs should be fulfilled before any wants are addressed.


No one is ever too young to learn to save money. This fact becomes more imperative when your child reaches the teen years. While their first instinct will be to spend their earnings on any and every thing they want, your job as a parent is to guide them in the usage of their money. Saving some of it is the best place to start. Help your teen open a savings account at your bank. Help them understand the importance of saving money in case of emergencies as well as for purchasing products or services that may be too expensive for just one check. You may even want to encourage them to open a second account to save for long-term goals, such as purchasing a car or for college.


When your teen gets closer to graduating from high school, this will be a perfect time to help them open a checking account. Use this account to teach them the fundamentals of check writing, debit cards, and online banking. Show them how to record their spending in the check balance book and review their bank statements. Also, may sure they understand how they can use both paper checks and online banking to help them pay their bills.


During their first year out of your house, either away at college or wherever their journey takes them, your teen will be bombarded with credit card offers. Many young adults are ensnared in this trap. This can bring about financial hardship that may haunt them for years. The best way to combat the attacks of credit card companies is to teach your teen early about responsible credit use. They should understand that a credit card can be a helpful tool when emergencies or other unexpected situations occur. Inform them, however, that using a credit card for everyday expenses can put them in a dangerous situation regarding their debt.

When it comes to credit, practice makes perfect. Help them acquire a card with a low limit. If your teen meets or exceeds that limit, don’t bail them out. Help them determine ways to earn money and pay off the debt in a timely fashion. A secured credit card is another viable option for teaching credit responsibility. You set the credit limit by providing the amount when applying for the card. A secured credit card also allows you to monitor the spending of your teen. This will help you pinpoint topics of interest when discussing red flags about your teen’s use of credit.

As a parent, leading by example is the best teaching tool for a teen in regards to financial education. Having your teen actively involved in managing their finances comes a close second. By learning good money management skills at a young age, they will be better prepared to handle their finances through their 20s and beyond. They will also be better equipped to instruct their children in matters of personal finance. Start teaching your teen financial preparedness today and help them begin a strong foundation for financial stability.