Photo: Horia Varland
The teen years present some particular challenges to any parent concerned with their child’s financial future. Whether in their early or late teens, most kids start to make money outside the home rather than relying on their parents for an allowance. This money is fuel to the fire of their independence: it buys clothes, music and technology that their parents may not approve of. It helps them bond with friends by funding activities away from the oppressive, supervising eyes of authority.
The overall challenge of parenting at this age is to guide your child into adulthood without smothering them or forcing them to do what you think is right. You don’t want your teen to make mistakes, but they must increasingly make their own choices to become adults. The same goes for finances. First lay the groundwork with your young child and preteen [links to previous articles], then move on to these tips. The goal is to guide your child, not push them.
Know your child.
The truth is that not every child rebels in the usual sense. Many young people go through their teen years without any serious upheaval between themselves and their parents; their relationship gradually transitions as parents relinquish control. These parents may be able to give extensive financial advice and help. Other parents and teenagers seem to fight with each other every time they are in the same room. If you fall into the latter category, you’ll need to be extra careful that finances don’t become a tense, taboo subject. You can’t help, and your teen can’t ask questions, if the lines of communication are closed.
Help them set up their first real budget.
Show your teen how to set up a budget. Help them estimate expenses. The details of this are dependent on your teen’s situation: are they a sixteen year-old with their first real job who is still living at home or are they headed off to college?
Teach, but don’t pressure.
Offer polite advice when appropriate, but don’t always expect your teen to take it. Understand that this stage of life is about separating from the control of parents and coming fully into adulthood. The more control you give up when your child is ready, the less fighting you’ll have to do. Discuss finances as you would with a close friend who needs your help.
If they earned it, let them spend it.
For the teen who is living at home, this tip is a big one. If you constantly try to interfere and tell your child not to ‘waste’ their hard-earned money on clothes or concerts, you only set up a battle of wills. You’ll make your teen want to spend even more extravagantly just to prove who is in control. On the other hand, if you expect some of your teen’s money to go to a college fund or household expenses, that’s fine; but that expectation needs to be in place when your child gets the job, not hastily implemented once you see how they spend their money. Any teenager will see through such injustice.
Set them up with a credit card.
I know. You’re thinking of the teenager in your life and your eyes are widening in terror. Before you get them a card, your teen should understand that credit cards are for spending money you already have, not for financing things you want. Teach your child to pay off their credit card, in full, every month. Then get your child a credit card; many banks have a student credit card with a reasonable credit limit. Why would I give you such a frightening piece of advice? Before I went to college, my parents did this for me. My husband’s parents did not. When I graduated, I had four years’ worth of credit under my belt. My husband graduated into an awful economy and found himself trying to establish credit at 22 with nothing but the lousy income from his first job to recommend him. It was not an easy start to adulthood.
Help them remember to pay their bill.
This is a situation that requires subtlety and grace. You don’t want to make your child think that you don’t trust them, but you certainly don’t want their credit to drop or interest rates to sky-rocket because of a late payment or two. The first few months, politely ask if they have paid their bill yet, giving them plenty of time to be able to answer, “No, not yet. I was going to do that tomorrow.” After that, casually mention paying your bills, specifically your credit card bill, or simply continue to ask directly if your child doesn’t mind.
The most important thing to do in the end: let go. Your child will make mistakes and will do things you don’t agree with, and not just with money. When they do make mistakes, you want your child to be able to come to you for help, not try to avoid you for fear of an I-told-you-so speech. Trust that even if your child spends wildly and makes poor choices in their teens or twenties, they will return to more moderate habits within a few years. Then, when they’re ready, you’ll be there.
