Teaching Teenagers Part 1

By Francisco J. Colayco, Ph.D

Even children can have fun learning to put aside a little money regularly that will reward them with a "prize". As your child grows into teens, he will have newfound freedom and money to spend. Today, while teens are encouraged to earn money, they are also given so many more opportunities to spend. Without proper advice from parents, teens can get into real financial trouble. Preparing teens for this responsibility will give them more self-confidence and develop a solid basis for their future financial success.

In a talk I gave to a group of high school students, I was pleasantly surprised that so many of them knew how to save. But…they were saving to spend and not saving to grow their savings! They were still like children saving up to buy a new toy. It is just that their new toy is a new cell phone or a new pair of designer jeans.

We all want our children to enjoy their childhood and not to worry about the future. However, upon reaching the teen years, they should start learning to make independent financial decisions in preparation for the real world.

How can parents teach financial literacy to their teenagers?

Involve your Teen in your family money management.

Money is both a personal and a family matter. Regardless of your financial status, it is best to involve your children in understanding the actual financial situation of your family. In so doing, you should take time to teach them, specially the teenagers, financial responsibility at a young age. Financial responsibility starts with learning the difference between needs and wants. Moreover, spending for wants must only be allowed if the source of money is money earned through savings, or, in the case of teenagers from money earned through extra efforts such as part time jobs.

Based on observation, children who are financially disciplined turn out to be more responsible as adults. It is important though that teenagers see that their parents practice prudent financial management. As parents, get them to participate in making the family budget as well as making their own monthly cash flows. You can also show them the many possible ways you save and invest your savings.

Encourage Teens to get into their own income generating activities like part-time jobs or some entrepreneurial projects.

By actually making money, teens can start learning to making their own decision on how to use their money without always needing to consult you. You may be responsible for their needs but they should learn early that they have to provide for their own wants.