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How to Teach Your Teenager the Value of Money (4 Exercises)

How to teach your teenager the value of money? See how their perspective changes after trying out these four different exercises.

How to teach your teenager the value of money?  

mom at table with daughter, both talking and smiling, text overlay "how to teach your teen the value of money - 4 exercises"

First, you need to figure out how you want your teen to value money.

Two things I can immediately think of to pass onto my own child:

  • Understanding the Power of Money: Open their eyes to what money can do when they are in control of it.
  • Stop Wasting Money: Get them to stop impulsively spending money on willy-nilly things that don’t amount to anything.

How can you accomplish either (or both) of these things?

Start by picking from the exercises below.

Exercises to Teach Teens the Value of Money

You’ll find that just one of these actions and exercises might start to open your teenager’s eyes to the power of money (and to better spending decisions).

However, it’s better to reinforce their new thinking about money and continue down this path by using more than just one.

So, pick one to start, then come back for more!  

1. Go Over the Family’s Money Values

As Tony Robbins says,

“We must remember that all decision-making comes down to values clarification.”

And since there’s a gazillion money decisions each of us has to make in a month, a year, a lifetime…then it makes a lot of sense to set up foundational money values we communicate to our teenagers.

Have you ever formally sat down to:

  • Figure out your own money values
  • Figure out the family’s money values
  • Communicate them to your teenager and kids?

It’s really a great exercise to do – it helps set the stage and expectations you have for money management in your house.

Here’s my article on money values, plus how to create your collection of family money values.

2. Help them Make Some Eye-Opening Calculations

Sometimes it’s helpful to not just talk to your teenagers about what you want them to learn…but to have them see it in action with their own eyes.

That’s where these calculations come in.

Calculate the Cost Per Use

Calculating a cost-per-use for whatever it is that your teen wants to have will help your teen in filtering their spending decisions.

And sometimes, it becomes obvious that whatever they want to buy is a real steal! Other times? Not so much.

To do this, your teen will need to estimate how many uses they’ll get out of what they want to buy. Then, they’ll divide the cost of the item by the number of uses to find what the cost of use is.

Here are a few examples:

  • Pair of $67 Jeans: Your teen says they will wear these twice a week, likely for two years. That is 208 times. You divide $67 by 208, and find that each time essentially costs $0.32.
  • Awesome $70 Halloween Costume: Your teen says they will only wear this one time this year. Meaning, the cost of use is $70.
  • Set of $45 Makeup Brushes: Your teen typically wears makeup once a week, and will use these each of those times. You guys research how long makeup brushes last, and find that with maintenance, they could last one year. That’s approximately 26 times they’ll be used, at $1.73/use.

Psst: here’s how to deal with a child who wants everything.

Calculate the Cost in Terms of Hours Worked

Do you know when I first heard about this eye-opening calculation? In my 20s. Imagine how far ahead your teen will be after they do this exercise.

This calculation is going to help your teenager see how many hours they need to work in order to afford what they want to buy.

Psst: And if they don’t have a job yet? Well, have them research the average hourly rate a teen can expect to make, and then do the calculation off of that (hint: you’ll find that in my free teen first job guide).

They need to find out their hourly rate of pay.

First, let them take their take-home pay on their last paycheck (or allowance), and divide it by the number of hours they worked.

Now, take whatever it is that they want to buy, and divide that by the amount they earned per hour.

That will tell them how many hours this item or event will cost them.

For example, if they worked 13 hours and earned $115 in their last paycheck (take-home, meaning after taxes and deductions), then they made about $8.85/hour.

Let’s say they want to purchase a $95 pair of shoes. They would divide the purchase price by their hourly pay, $8.85, and find that they’d have to work 10.73 hours to pay for them.

Here’s the important part: ask them if they still think it’s a good use of their money to buy those shoes.

And let them answer honestly – if they honestly want to spend 10.73 hours of their life working for a pair of shoes, then they should. But if they think it’s insane to work that many hours for a pair of footwear, then they can move on (feeling good about their decision).

Hint: does your teen get an allowance instead of working? Have them calculate how many weeks’ allowance those pair of shoes will be. Essentially, are they willing to wait that length of time and use that much of their resources for the shoes? That’s the question they need to ask themselves.   

3. Help them Work through Paying for Something

Sometimes, a teen needs to put their energy and money into something to really start to understand its worth.

You can help your teen do this by having them pay for a bigger purchase that they’d like. This is something that will take them awhile to save up for – a short-term financial goal that they can achieve in 1-2 months would be best.

Guide them as they work on this savings goal. Here’s my article on how to save up for an iPhone as a kid, with steps you can use for any savings goal.

4. Help them Weigh the Real-Life Tradeoff

An effective way to help any of us figure out if spending our money on something is worth it to us is by calculating what else we could buy with that money (and then seeing if it’s still worth it).

It’s the tradeoff we’re making, in real terms your teen can understand.

So, ask them what else they enjoy buying with their money. Then, ask them to calculate how many of those things they could buy if they chose to not buy this thing.

Then, they need to answer for themselves if what they are thinking about buying is worth the tradeoff or not.

For example, let’s say your teen wants to go to a concert that will cost $89 for the ticket. And let’s say they also love to go to the movies with friends on the weekend (at about $17 per pop, after food/drink is paid for).

How many movies are they going to forego to get the concert ticket? They could go to the movies 5 times for what they’re going to pay for that concert.

Is that worth it to them? Only they can answer that.

You can also reverse this equation. Meaning, if they buy lots of vanilla bean Frappuccinos at Starbucks, but they really want to purchase something big, then calculate how many of those drinks they’ll need to forego to get what they want. Which one is worth it more to them?  

Remember that teaching your teenager the value of money is a process. While just one of these exercises or calculations may help to open your teen’s eyes, they’ll need to keep using prompts, having conversations, and having real-life experiences to fully understand the power of money, and to stop “wasting” money on so many impulse purchases. Lucky for them, they have a caring parent (that’s YOU) who is willing to show them the way!

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Amanda L. Grossman is a Certified Financial Education Instructor, a 2017 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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