Learning about personal finance should be a lesson that occurs at a young age but for the most part schools and other 
sources neglect to really focus on handling money effectively even from a young age. It is a parent’s duty to ensure that a teen is learning how to handle their money. While many parents do make a proactive attempt at teaching kids about money, many do not.
Teens especially start spending early. They either have the luxury of unlimited financial resources from their parents or they learn to earn their own cash by doing chores and having other responsibilities that earn them an allowance each week. Many teens will look to their parents’ own spending behavior to learn how to handle cash but more often than not, a teen will be most influenced by their peers and those individuals in a celebrity status. Money is a motivator for many things in a kid’s life. The price of an item bares a lot of weight among youth. It is not uncommon for teens to spend an month’s worth of grocery money on a new pair of sneakers, which they may be prone to wearing only a handful of times before they are wont to trade up for a new pair.
Peers will often encourage their counterparts to go with the flow and there may be consequences should a teen chose not to follow. For instance, “everyone” is getting new designer gowns for the spring formal. Those that do not splurge for the designer label may be ridiculed. Not conforming and its consequences can be a monumental issue for youth. Those teens that do not learn the importance of saving money at an early age or the basics of budgeting for what they want, are likely to spend recklessly with little thought to the actual financial consequences as opposed to friendship consequences.
Today’s society offers teens a lot of eye candy that is quite expensive. From the pricey sneakers to the expensive video game equipment, many of today’s teens are accustomed to the “gotta have it now” line of thinking. They want immediate satisfaction and have little patience for waiting. These characteristics can follow a teen into adulthood and these are the traits that lead to overspending and debt. If a teen is not learning to budget and save the cash they have access to now, they may find it difficult to make that transition once they are adults.
It is not just teenagers anymore who are a marketing demographic. “Tween”agers are just as suseptible to the charms of the retail industry. There are more products, television shows, and video games that are geared towards kid under the age of thirteen. These kids learn from a very young age about wanting things but rarely do they comprehend the difference between wants and needs.
As parents who have an obligation to make sure their teens are prepared for adulthood, lessons in money should be a top priority. Here are some tips to help parents teach their kids the right money lessons:
- Don’t just give cash, make them earn it. Instituting strict guidelines for earning money by doing chores, odd jobs, and other duties to earn cash can help kids understand that later in life money will not just be handed to them. They will have to make the effort to earn it. This can not only help with money management lessons, it can help kids find a sense of direction and a desire to set goals.
- Teach kids real money management lessons. Every thing in personal finance that you use as an adult can be taught to kids. Budgeting, managing a bank book, tucking away a percentage of cash into savings, and how to save for big-ticket purchases are all relevant lessons kids can benefit from now as well as in the future.
- Work with children on understanding the distinct difference between wants and needs. Help kids work on honoring waiting periods before making a purchase. It helps differentiate between things they want and things they need and teaches kids that spending money is not a decision to be made impulsively.
- Teach older teens the importance of good credit, how credit is established and what it means to have bad credit. Many older teens may be asking for a credit card. A prepaid credit card may be a good teaching tool for beginners.
- Make kids responsible for their spending. If your child has a cell phone, require them to earn the money to pay for the extras such as texting and accessories. If your child is of driving age, help teach them responsibilities of driving by having them pay for insurance and other incidentals.
