How Do I Teach My Teen Good Money Habits?

Military family dinner

Content provided courtesy of USAA.

One of the main goals of a parent is to prepare your children for adulthood.

To that end, few lessons are as useful as learning how to handle money, says JJ Montanaro, a CERTIFIED FINANCIAL PLANNER™ with USAA. Many of us learned those lessons the hard way. By educating your teens on family finances, you can pave the way for their success.

Letting your children help with the shopping is a good learning experience, Montanaro says. When it's time to buy back-to-school clothes, for example, provide teens with a set amount of money and a list of things to buy with that money — perhaps a couple pairs of pants or skirts, some shirts, a pair of shoes and a jacket. Provide enough to cover the purchases without being extravagant. This can demonstrate the importance of comparing prices and sticking to a budget.

Show teenagers how you manage your own budget and savings. Sit down with your paycheck and your bills to let them see where the money goes. Many teens have no idea how much their parents make, how it's spent or how taxes work. Discuss the importance of saving for the future, whether it's for college, a home purchase, a wedding or a family.

If you have a family financial planner, introduce your teens and discuss why planning is essential.

Finally, understand that your children will make money mistakes. When it happens, discuss what they learned from the experience. Financial lessons learned at home with your oversight and input can make the road ahead less bumpy.

Montanaro offered these additional tips:

  • Good habits start at home. Set a fiscally responsible example for your children. They can learn good habits by watching you budget, set goals and manage money wisely.
  • Urge impulse control. Teach your kids the difference between things they want and things they need.
  • Set a budget. Help your teens set up guidelines for how they spend and save their own money.
  • Provide the tools. Consider setting your teens up with a checking account, a savings account and, if possible, a credit or debit card with a preset limit.
  • Start putting money away. Emphasize the importance of saving, even if it's just a small amount.
  • Talk about money. Discuss money with them on a regular basis. Open, frank conversations are crucial to their understanding of how to handle money.

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