The best teen money management tips are what every parent should be focusing on when their kids hit this age.  The teen years usually means moving further away from your parents and more towards independence.  With regards to money, kids often begin spending on little luxuries with money from an allowance or a part time job.  However, teens often do not have a strong understanding of finances.  They will typically wind up developing poor spending habits that can lead to debt down the line.  This all spells future financial struggles and poor decision making when it comes to money.

Below are 10 teen money management tips to pass on to your kids right now


Get your teen involved with money

The only way your teen can learn all about money, is to start getting involved directly with financial obligations.  Here are some great ways to get your teen involved with money:

  • Pay for non-essential things:  This can be things like clothes and cosmetics – Instead of buying your kid those new shoes, encourage them to save up for it. This teaches them the value of hard work and also shows them how to weigh their priorities.  Do they want to spend $50 on the shoes or save that for a fun night with friends?
  • Pay for extracurricular expenses:  Have them pay for their dress or tux for the prom, pay for dates or outings with friends.  By having your teen fit the bill for their extracurricular activities, they will learn a good lesson in money management.  Not to mention they will place more value on these things as opposed to take them for granted if they were paid for by you.

Get them making their own money

If your child is of age, get them to work as opposed to paying your teen a weekly allowance. This is one of those teen money management tips that is essential.  Even kids who are under the age of 15 can get a job walking dogs or cutting grass for the neighbors.  Hey, even a lemonade stand works!  For those that are of age, babysitting, bagging groceries, dishwasher etc. are all teen jobs for the taking.  A job will help build your teen’s character as well as teach them some financial independence. Moreover, a job will impart skills that your teen will certainly take with them once they move on to an “adult” job later on.

Teach them about budgeting

One of the core teen money management tips is learning how to budget money.  How much is coming in  vs. how much is going out.  Now your teen will not have tons of bills to keep track of but they should have some financial obligation to keep track of.  As mentioned above, they should try and purchase their own little luxuries or fit the bill for outings with friends.  Get them involved with a budgeting app so they can see in real time how money comes in but quickly goes out too.

Open a savings account for them  

If your teen is going to learn to be financially independent, they need to be in charge of their money.  Starting a savings account is a key teen money management tip. Your teen is going to want a car at some point along with other lofty expenses like college.  A savings account will help them start saving towards these goals.

Aside from a regular savings account, an emergency savings account is something to throw into the mix.  If your teen has a car or will be getting one, they may have repairs that pop up from time to time.  At the very least, it will need regular oil changes.  An emergency savings account will show them how important it is to have money put aside for unexpected expenses.

Teach about student loan debt

We all know how expensive college is and it will continue to go up.  Now is the time to discuss career goals with your teen.  Take the time to make sure they have a a clear picture of whatever profession they are considering before committing to the large price tag that comes with college. Perhaps they can shadow someone in the field or apply for an internship in the industry.  If they are going to have to take out student loans, they need to understand that it is not “free money”.  You want them to have a clear understanding of the financial impact debt can have.  You also want to go how the cost of college varies by where you attend.  Whether it be vocational, ivy-league, 2yr vs. 4 yr., private vs. public etc.

Find them a good money app

Teens are all about their phones nowadays so the key to getting them onboard with financial literacy is to meet them where they are at. There are great money apps for teens out there that can help them create good spending habits.  Find an app that will allow your teen to track his/her spending, set spending limits, set alerts and reminders etc.

Show them how a debit card works

Just like you want them to open a savings account so they can see how saving money will help them with paying for for things and unexpected expenses, introducing them to the world of debit cards is just as important.  Open your child a checking account for teens or co-sign an account with them.  Show them how a debit card is linked to the money that is in their checking account.  Explain to them that they need to always be aware of their balance so they do not overdraw their account and incur fees.  This is where a money app that can link to their checking account will come in handy.

Good debt vs. bad debt

Debt can be seen as something bad.  With student loan debt and credit card debt, the word debt definitely has taken on an overall negative connotation. With that being said, there is a difference between good and bad debt.  Teach them that the following forms of debt are seen as good debt that will help to serve them later in life:

  • A mortgage loan for a home that comes with low-interest rates and favorable payment terms that helps build equity.
  • Personal loans that are used to start a business, perform home renovations or consolidate debt.
  • Auto loans.

When it comes to bad debt, they need to know that that will come in the form of credit card debt, as an example.  Explain how people accumulate debt when they spend on luxuries and other items they really can’t afford.

Teach them how to read a pay stub

Once your teen gets a job and starts earning a paycheck, teach them how to read it.  Help them understand the following:

  • Gross pay and net pay –  Gross pay being what they earned prior to any withholdings like taxes.  Net pay is their take home pay with taxes taken out.
  • YTD – Year-to-Date.  How much money you have earned up until that point.
  • FWT – Federal Withholding Tax – This is paid to the federal government on your behalf and the money goes to various programs like social security.
  • SWT – State Withholding Tax–  Only seven states don’t collect this.

If they don’t have the money, they can’t spend it

This is the slippery slope with credit cards.  Credit card companies thrive on a teen or college student applying for a credit card since many don’t have the financial literacy to properly handle one.  It is crucial teens understand the reality of credit cards and how it is not free money.  They need to understand the realities of credit card debt like how interest rates compound, the potential negative affects on credit scores, what it means to miss a payment, late fees etc. Provide them with real life scenarios like how spending $50 can wind up costing a lot more if it is not paid off by the end of the month.  Encourage them to stick with using their debit card so that they are only spending money that is actually theirs.