Teaching Teenagers

AS YOUR CHILDREN grow older, you’ll want to give them more financial responsibility, talk about money in depth and prod them to make smarter decisions. These strategies might help:

  • As with younger children, you want your teenagers to feel like they’re spending their own money, even if it’s your money that they are spending. For instance, you might deposit their allowance in a bank account that comes with a cash-machine card. That way, when they want money, they’ll no longer ask you. Instead, they will have to ask themselves and then head down to the ATM.
  • You might give your teenagers a larger allowance but less often, such as once a month or once every three months. That will compel them to budget. You might also increase their allowance to include a clothing budget, so they have a growing sense of responsibility and they have to make more financial choices.
  • Once your children have earned income, encourage them to save for retirement by, say, offering to give them 50 cents for every dollar they put into a Roth IRA or 401(k) plan. Similarly, to encourage them to save for that first home, you might offer to contribute to a savings account intended to pay for a house down payment—but only if your children also contribute to the account.
  • Set a good example. If you are obviously thoughtful and prudent in the way you handle money, your kids are more likely to follow your example. Consider showing them your account statements when they arrive in the mail. Discuss how you paid for their college education. Talk about what you have done to prepare for retirement. Any one of these discussions may have limited impact. But over time, your children will likely learn a lot.

Next: Allowances

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