Tips on Raising Your Pre-Teens and Teens

Lesson 1: Handling earnings from a job

Teens often have more expenses than younger children, and your child may be coming to you for money more often. This is an opportunity to teach your teen about money. You might want to encourage your teen to get a part-time job. Here are some things you might want to discuss with your teen when he or she begins working:

• Limit the hours worked so it won’t interfere with schoolwork and family time.
• Agree on what your child's pay should be used for. Now that your teen is working, will he or she need to help out with car insurance or clothing expenses, or do you want your teen to earmark a portion of each paycheck for college?
• Talk to your teen about taxes. Show your child how FICA taxes and regular income taxes can take a bite out of his or her take-home pay.
• Introduce your teen to the idea of paying yourself first. Encourage your teen to deposit a portion of every paycheck in a savings account before spending any of it.

A teen that is too young to get a job outside the home can make extra cash by babysitting or doing odd jobs for you, neighbors, or relatives.

Lesson 2: Developing a budget

Developing a spending plan or budget that includes items like clothes, recreation, and gas for the car can help your teen learn to manage money. Your goal is to teach your teen how to find a balance between money coming in and money going out. Have your teen start by listing out all sources of regular income (e.g., an allowance or earnings from a part-time job). Next, have your teen list regular expenses (don't include anything you normally pay for). Finally, subtract your teen's expenses from his or her income. If the result shows that your teen won't have enough income to meet his or her expenses, you'll need to help your teen come up with a plan for either spending less or earning more money. Here are some ways you can help your teen learn about budgeting:

• Consider giving out a monthly, rather than weekly, allowance. Tell your teen that the money must last for the whole month, and encourage him or her to keep track of what's been spent.
• Encourage your teen to think spending decisions through rather than buying items right away. Show your teen how to compare prices or wait for an item to go on sale.
• Show your teen how to change a budget by listing expenses as needs (expenses that are unavoidable) and wants (expenses that could be cut if necessary).
• Resist the temptation to bail your teen out. If your teen can depend on you to come up with extra cash, he or she will never learn to manage money wisely. But don't be judgmental--your teen will inevitably make some spending mistakes along the way. Your child should know that he or she can always come to you for information, support, and advice.

Lesson 3: Saving for the future

Now that your child is a teen, he or she is ready to focus on saving for larger goals such as a new computer or a car and longer-term goals such as college. Here are some ways you can encourage your teen to save for the future:

• Have your teen put savings goals in writing to make them more concrete.
• Encourage your child to set goals that are based on his or her values, not on keeping up with what other teens have or want.
• Motivate your child by offering to match what he or she saves towards a long-term goal. For instance, for every dollar your child sets aside for college, you might contribute 50 cents or 1 dollar.
• Praise your teen for showing responsibility when he or she reaches a financial goal. Teens still look for, and count on, their parent's approval.
• Open up a savings account for your child if you haven't already done so.

Lesson 4: Using credit wisely

Show your teen how you use your credit card wisely. Explain how fees will be charged if payments are not made on time and that finance charges will be added if you do not pay the bill in full each month. Go over the credit card bill with your teen to show him or her how they can keep track of where the money is being spent each month.