The best research studies often lead to unexpected insights. A few years back, several hundred young adults in their 20s were surveyed on what they wished their parents had taught them growing up. The results were a little surprising. They wished they had been taught how to limit debt, how to save and invest, how to plan ahead and how to live within their means. If these are so important to 20-somethings, what should we do as parents to address these topics with our teenagers?

Teenager & Money

No matter when you start to talk with your children about money, keep it at their level. There will be 13-year olds who don’t know what a mortgage is. So tell them “Houses are expensive – the bank owns half of our house”. Can you describe what the difference is between a credit card and a debit card? If so, tell your young teens about these things. They’ll be interested in when you use them and why.

Tell your children about the mistakes you made with money (as a child, and even recently). But just like their involvement in sports – learning is not all about classroom theory. It needs to be experienced. In fact they will learn the most by making mistakes as long as you don’t bail them out), and that’s why it is important to give them an allowance. It affords them the honour of managing money, hopefully from an early age, and puts them in charge of their own wallets.

Allowances should start with $2 – $5 a week but, by the time they turn 14 or 15, they should be responsible for their own entertainment expenses (going to the movies), food with friends and clothing. This means you should increase their allowance to maybe $50 – $100 a month to cover these things when they are ready. And yes, moving to a monthly allowance will help them learn how to budget even better. There is no better way to empower your children than to have them decide whether to get a new pair of jeans or go out to the movies with friends. It’s called real life – not being able to afford it all.

And of course there is no better way to link the concepts of ‘work’ and ‘money’ than to encourage your teen to get a job. Having a boss, a work schedule and needing to balance school, work and social activities is a life skill. And a little spending money will help them start to realize the importance of valuing the resources they have.

So, enjoy this part of your parenting. Give them clear responsibilities and a fixed allowance each month so the next time they ask you for $20 so they can go out with friends, you’ll have a great answer: “Your next allowance is coming on the 1st of next month.”