How to Teach Your Teenager Financial Responsibility? Do This, Not That.

How to teach your teenager financial responsibility? Let me show you what your role as parent should be in guiding your teen through learning to manage their money. 

You’ve got a teen or a tween, and you’re wondering how you’re going to help them manage their money.

Maybe it’s not going so hot – they seem to want to spend their money on everything except what you want them to spend it on.mother laying on bed talking to teen daughter, text overlay "guide how to teach your teen financial responsibility"

Maybe they’ve already over-withdrawn on their new checking account, and you’re worried that they’ll follow in your own financial mistakes.

Or, maybe you’re just being proactive (hey, look at you go!) and want to make sure you’re doing things right.

Today, I want to talk about YOUR role, as the parent, in teaching a teenager financial responsibility. I mean – what are you supposed to be doing to make sure they manage their money and actually learn those vital money life skills?

How to Teach Your Teenager Financial Responsibility

Let’s talk about the 3 strategies you can use today to parent your teen through managing their money.

Strategy #1: Instead of Saying “No”, Give them Money Guardrails

I don’t have to tell you that you can’t fully control your child. In fact, if they’re already a teen, you probably know that you actually control far less than what you used to.

And parenting is set up this way – since they’ll be fully responsible for themselves in just a few short years, parents need to move from a manager position into more of a mentorship position as a child ages.

Knowing how much to control your child and how much to loosen the reins is one of the most frustrating parts of parenting, especially when all they seem to want to do is everything that you don’t want them to do.

Teen money management is no different.

Instead of trying to control the way that your child manages their money – how they spend it, how much they save and what they save up for, etc. – set up money guardrails.

By giving them just a few rules and boundaries as far as how they can and cannot manage their money, you’re opening up some freedoms for them to make the kinds of money decisions they need to make now, when their mortgage payment is not depending on them getting it right.

Example Money Guardrails:

  • Spending Threshold: You can choose an amount of money that they cannot spend without getting your permission, such as $30 and above, or $50 and above.
  • Spending Location Rules: If you know that certain stores do not carry anything in them that you would allow your teen to wear, use, or otherwise buy, then set up a rule that they cannot spend any money at that location.

Pssst: you'll definitely also want to check out my comprehensive guide on teenage money management. 

Strategy #2: Instead of Ignoring How they Want to Spend their Money, Use their Wants to Teach Them

You’re not ever going to get your teenager to stop wanting things.

I mean, do you ever stop wanting things? No. You might tell yourself you’ve stopped wanting them, or you might save up for them because you’re spending your money on other needs at the moment – that’s called impulse control.

But your teen? Their brains are still growing and delayed gratification is not a natural tool built into every brain.

I want you to stop ignoring or pestering your child over what they want to spend their money on, and instead just say “okay, here’s how you can get that”.

Ask them what their savings goal is (i.e., what they want to buy, but can’t afford in just one allowance or just one pay period), and then tie all of your money conversations around how they can get what they want.

This means you can use their desire to buy a horse as a springboard for a conversation on how to set a savings goal and make progress on it.

You can use their desire for a new gaming system to talk about ways to earn extra income (like online jobs for teens), and how many hours they would need to work in order to afford that new gaming system.

Take their desire to buy a lifelike Elsa doll to discuss something you saved up for as a child, and what you did to actually afford what you want.

The ways you can use this are endless, so long as you make that mental shift from seeing their unreasonable spending desires as a burden and instead as a platform for some critical money lessons.

Strategy #3: Instead of Bailing them Out, Let them Sit in their Money Mistake

Natural consequences are a tool in your favor, Mama.

Sure, it’s incredibly hard to let our kids and teenagers make mistakes – especially when we have enough hindsight to fill a landfill.

But you’ve got to a) let your child make their own financial decisions, and b) be willing to love them enough to allow them to sit in their consequences.

Think about it. Your child is in the unique position of being able to make financial mistakes that won’t cost them more than a few allowances, or a few paychecks (at minimum wage). Imagine if you don’t let them feel those natural, negative consequences now, but instead they get to feel them when they are in charge of a real paycheck from a job-job?

Let me tell you – my inbox for my adult personal finance site is littered with stories from adults who have gotten themselves into major financial trouble (think: bankruptcy, upside-down deals, quick-scheme scams, etc.) that also happen to tell me they had no money education when they were a child.

You are in a position to not only give your child a money education, but to actually allow them to self-discover some vitally important money decisions by simply sitting back and letting them fail.

Let them sit at home next weekend because they spent their money on a video game that they’ve now beat and lost interest in.

Let them buy into a “saving money” deal that they’ll eventually figure out is not saving them money, at all (like when I joined BMG as a teenager and finally figured out not only was I not getting any free CDs, but I was being charged more per CD overall than if I had just purchased them at a store).

Let them lose their band uniform and have to pay back the $386.14 (like I did, in high school).

Each of these failings is a powerful money lesson that will give them a leg-up when they’re out in the real world, and there aren’t any do-overs.

Strategy #4: Instead of Solving their Problems, Ask them Neutral Questions

Who loved it when their parents nagged them as a teenager? Or when they did one of those “I told you so” you know they were entitled to (especially now that YOU’RE an adult and you have lots of those moments), but that you hated hearing.

No teenager, ever, wants to be nagged, bossed around, or given a “I Told You So” form their padres. Trust me on this one.

The best way you can help your teen manage their money problems as they pop up is to mentor and guide them through it. And when you’re a mentor? You step back and simply try to ask the right questions.

In Real Simple’s October 2018 magazine all about How to Raise a Problem-Solver, they talk about the importance of simply asking questions, rather then jumping in and trying to solve things.

“Swooping in to fix a mistake – or handling a task from the beginning – is so easy. And you’ll do it better. But asking your child questions (in a neutral voice) when she’s facing a problem helps you pause long enough to avoid the swoop and gives her practice in decision-making.”

Now, with money, things tend to get a bit personal. Because we still tend to see our kid’s money as OUR money (especially if we just paid it out to them through an allowance, chore commission, or a birthday present).

So, I’m going to tell you this little trick for how you can keep that “neutral” voice and act as a mentor: decide that their money is no longer your money.

Think about it – if it’s your money, then you hate seeing it get wasted. You see all of their spending as one big waste-ball because you are looking with an adult lens and you know that you could use that to pay the water bill or to feed everyone on Friday night, or so many other really responsible things.

But, this isn’t about you anymore.

This is about teaching your teen to manage their money. And, specifically, teaching them to manage it while they aren’t in a position to make really BIG mistakes that can last for a long time (i.e., when they’re an adult).

SO, you’ve got to step back and make the mindset that this is THEIR money, and if they “screw up” with it? Well, that’s on them. Not only is that on them, but those consequences you’ll naturally let them feel (if you use the strategy from above) is going to be such a cheap money lesson for them to learn…so actually, it’s a great investment, anyway.

Great mentor and neutral questions to ask that can help your teen brainstorm through a problem:

  • “What do you think you’re going to do about it?”
  • How did someone else you know handle this, and did it work out for them or not?
  • “What’s your plan for getting this done?”
  • “What has happened when you’ve tried doing that in the past?”
  • “What do you want to do differently next time?”

Remember this one thing when parenting your teen through their money mistakes: It’s not aging and maturing that helps your child become a Money Prodigy. Just think of all the 40-year-olds who cannot manage money at all, yet they’re completely responsible in other areas of their lives.

Rather, it’s through experience in making decisions, seeing the outcomes, living with the consequences, and changing ways that they will actually learn how to manage money. So, don’t be afraid to put them in the driver’s seat and be their passenger as you help guide them through their money mistakes and successes.

Make these mindset shifts when parenting your teen through money management and beyond, and you’ll allow them to self-discover the kinds of money lessons that will help them thrive as adults. Choose not to? Well, they’ll still get these money lessons one day – it’ll just be when they’re in a position to screw up much more. Like when they’re 27, newly married, and the mortgage is due.

Teenage Money Management Apps to the Rescue

In your role as mentor and “wise person who gives guidance” (yes, that’s YOU), you can also influence your teenager by pointing them towards some good teenage money management tools and resources. Heck, you could even buy them or sign them up for a few and get the ball rolling a bit quicker.

App #1: FamZoo

There isn’t a specific subset of money management apps that are JUST for teenagers, but there is one in particular that has the kinds of features that would appeal to both you and your teen.

It’s called FamZoo, and it’s a robust family money management app that gives your teenager access to a prepaid debit card, as well.

What makes this particular one useful as a teenage money management app is as your child starts to owe YOU money (for their money responsibilities you’ve given them to pay for, or for services they want but you have to subscribe to and they pay you back, etc.), you can have them pay you through this app.

It makes managing money as a family – with allowances and chore commissions – as well as a teenager, easier.

App #2: For a goal-oriented teenage money management app (where your teen can save money towards a savings goal, like buying a car), check out the free Plan'it Prom, which takes your teen through the budgeting and goal-saving process of planning (financially) for prom.

App #3: Another app to help your teen with money goal setting is the free Teen Entrepreneur Toolbox App, which has a nice area for setting, tracking, and meeting a savings goal.

Psst: the entire Teen Entrepreneur Toolbox is pretty cool, too.

I hope you can see that how to teach your teenager financial responsibility is really all about how you parent them through their money management woes. They’re going to make money mistakes – we all do – and if you handle it as a mentor, you can guide them through self-discovering some really, really important money life skills. You’ve got this, Mama Bear!

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Amanda L. Grossman is a Certified Financial Education Instructor, a 2016 Plutus Foundation Grant Recipient, and founder of Money Prodigy. Amanda's kid money work has been featured on Experian, GoBankingRates, PT Money, CA.gov, Rockstar Finance, the Houston Chronicle, and Colonial Life. Read more here.
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