How to Teach Teenagers About Money Management

How to teach teenagers about money management and financial literacy.


MoneyMgtTeaching teenagers budgeting and money management can be important skills that can make their life easier. If you have teens who have probably started earning on their own, teaching them how to manage money can be the most valuable life lesson you can give them as parents and guardians. So, it is always a good idea to teach them about money management, budgeting and investing. 


This article will walk you through some basic yet important points on how to talk about money management to help your teens get financial independence and feel responsibility. 


According to JJ Montanaro, a certified financial budget planner, financial literacy is a parental responsibility as important as providing food, shelter and clothes. As teenagers start reaching adulthood, there is nothing more important than learning how to spend and save, what to take into account while saving and how to budget their money. 


Parents must do the following to teach responsibility to teenagers properly:


  • Learn how to inspire teenagers
  •  Stop assisting and spoon-feeding them everything
  • Promote excellent behaviors, provide responsibility cues
  • Set an excellent example of responsibility for your children.


Start with making them understand what budgeting is, why budget matters and what budget consists of. Teens should be aware that a budget is a strategy for spending money every month. By devising a strategy and a budget plan, you can avoid being in debt and spending more money than you have. The two most important elements necessary in creating a budget are income and expenses. Teens should know how to record their income, expenses, and other funds, which will allow them to learn about their monthly expenditures. 


The following are a few steps that you can follow to make your children aware of the new ways to save, invest and devise perfect money management strategies:


1. Save for a bigger goal:


When your kids receive money from jobs, gifts or allowances, encourage them to save it. There should be a proper portion in their budget for saving money for future use. Suppose they have a big purchase goal, help them in determining two things:


  • How much money they would need
  • When they would need it


Give them a target amount and help them reach it by encouraging them continuously. Just like adults, teenagers should learn early to make their money work for themselves. 


2. Investing is always a good idea:


Foster your teens to invest up to 10% of their income. Teenagers can invest in a variety of ways, including:


  • Investing in a company’s stock
  • Purchasing a low-cost mutual fund
  • Getting a high-yield savings account 
  • Start a Small Business
  • Invest in Cryptocurrencies


Cryptocurrencies like Bitcoin, Litecoin and Ethereum have been the talk of the town nowadays. People are accepting and investing in it heavily to get maximum profits. According to experts, the world has gone digital and cryptocurrency is the future. For keeping a better record of money, people can use a Bitcoin calculator to see the current value of investments. 


3. Give them access to budgeting tools:


MoneyMgt2Make budgeting for teens an interesting task. Give them access to tools such as spreadsheets, budget apps and budgeting worksheets. It can help by keeping them connected to their money. Once your child is able to make use of these budget apps and tools, ask them about it frequently. Help them make adjustments and talk to them about their goals. 



4. Teach them about needs and wants:


Making your teens realize the difference between needs and wants is one of the essential steps in teaching money management. Keep it simple by explaining that a need is something you can’t live without, something like rent payments, but want is something you can live without, for instance a Netflix membership. For this, help them categorize the budget they create. For example, if you are on a limited budget, you can categorize back-to-school shopping by what is necessary and what is simply a want.


Here, the main goal is to teach children to prioritize spending so that their needs are met. 


5. Put them in charge of their finances:


Instead of buying gas, clothes and other necessities for your teens, make them in charge of their own expenses. Allot a certain amount and set a target for them to follow. Keep a proper check-in starting, but you can let them do what best suits them. This one strategy may teach children more about family budgeting than they could ever learn by reading about it. That is why you need to do this as early as possible. Giving your teen a set but consistent amount of money will teach them to stick to a budget. Any blunder or impulsive buy will cost them alone. Teens will be aware that no more money will be coming in until the next pocket money or salary schedule. 


Teenagers who get money whenever they need it are less likely to be careful with their money.


6. Help Them Protect Their Assets


Teaching your children about protecting their assets is also an important part of the financial education process. According to Eiman Sharmin, an identity theft expert, and credit report litigation attorney, after you put your child in charge of their own money, it’s imperative you educate them on the potential financial threats that can lurk online or on bank statements. Identity theft and credit report fraud can happen to anyone.


Always make sure you have you have your child double-check with you before they enter any personal information online. In addition, have them shred any old bank statements and protect any personal documents in a secure place. Typically, a child under the age of 18 won’t have a credit report unless someone has used their information for fraud.


An easy way to find out if someone is using your child’s information to commit fraud is to check if your child has a credit report. To do that, contact the three credit bureaus (find their contact information at and ask for a manual search for your child’s Social Security number.


Read  7 Tips You Can Start Using Now to Help Your Teen Gain Financial Success.




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