parent and teen online

Ways Parents Can Aid Teens In Becoming Financially Independent.  

By Tyler Jacobson

Help your teen save and make money.

As a parent raising teens in this tough economy, I am actively working toward raising independent teens who have a strong handle on their finances long before they leave home.

While I would never turn my adult children away if they needed to move home, I am doing my best to ensure my teens can stand on their own feet financially. Unlike what some people may believe, this process of developing financial independence needs to begin when your children are teens.  

Help Teens Develop A Budget

At first, it can seem silly for a teen to have a budget. For many teens, their budget is when their money runs out, and their parents refuse to give them more. However, this practice sets a bad precedent.

By allowing teens to spend until they literally can’t spend any more money, they may fall into the attitude of living paycheck-to-paycheck as adults, with out-of-control spending habits.

My children receive an allowance once a week. One of our firm allowance rules is that once the money is gone, the bank is closed.  And our children have to wait until the next allowance disbursement. My oldest daughter had just entered her teen years when she found this rule unfair, as she liked going with my wife and some of her friends to the mall but never seemed to have money to shop.

Instead of just upping her allowance amount, which would have been unfair to our other children and violated other allowance rules, I had my daughter track her spending. After one week of writing down everything she spent her money on, we saw that she liked to buy vending machine snacks and buy lunch instead of packing a lunch until she ran out of money. By bringing her own snacks and lunch to school, my daughter was shocked to find she finally had money to spend on the weekends.

Assist Teens With Their Job Hunt

It is a good idea to help your older teens find a job while they still live at home. By having a job while living at home, your teen can learn how to deal with the pressures of working and following some else’s directions while not having to worry about food and shelter.

Many employers post their job applications online, so you can sit down with your teen and help them search for jobs that may be a good fit. Also, once your teen lands an interview, be sure to hold a mock interview session so your teen can be prepared for the most common job interview questions. Your teen may roll their eyes like my two oldest teens did when I interviewed them, but both admitted the mock interview helped them be far more prepared in the real interview.

If your teen is too young to be hired but still wants to start earning money, help them by looking at your network of family and friends.

  • Is Grandma willing to pay a little to have them scrub their kitchen or other chores?
  • Is your teen willing to knock on neighbors doors and ask if they are willing to pay to have their lawn mown?
  • Do any friends need a babysitter?
  • Are there extra jobs around the house, like detailed crown molding cleaning or fence painting which you are willing to pay your teen to do?

Teach Children About Credit Cards Early

Credit cards are traps which many young adults have fallen prey to as many parents just tell their children to avoid using credit cards. But once they hit college, many young adults open credit cards to increase their spending limits without the means to meet more than the minimal obligations. Some of the things I have covered with my teens in regards to credit cards:

  • Start with secured credit cards – Unlike a traditional line of credit, a secured line of credit draws on a deposited amount. It teaches teens to responsibly pay back the secured amount, but unlike a prepaid card, as the secured card is refilled by being paid off, your teen will build credit. There are many secured credit card options for teens, so involve your teen as you both determine which is best for them.  
  • Avoid store cards – Store-specific credit cards often have some of the most aggressive interests rates of the standard credit cards. While they can offer alluring deals, you should teach your teens to either avoid them until they have a few years of established credit card history and a strong repayment ethic.
  • Minimum payments aren’t enough – It can be easy for a teen to use a credit card and promise themselves they will pay it off quickly. Say they spend $200 on credit, with an annual interest rate (APR) of 14.09%. For 9 months, they will need to make $25 minimum payments. While this sounds simple, it is easy to brush off that amount and use the credit card for a meal here and a friend outing there, until the minimum payments have ballooned up. Also, being late is an extra penalty which costs more money. Instead, I teach my teens that if they have a bill that needs to be paid on Wednesday but they are paid on Friday, that is when it is appropriate to use a credit card.

Making sure your teen is financially independent is tough. In all honesty, none of us parents are sure we’ve done a good job until we see our child make it on their own. But, by doing the best we can before they leave, we parents can feel more confident that we did our best to prepare our children to stand on their own feet.

7 Activities For Fathers And Teen Daughters To Connect And Bond

3 Ways Family Dinner Helps Teens

Tyler Jacobson

As a father of three, Tyler Jacobson lends his parenting experiences for the learning benefit of parents everywhere. For years he has researched and writes for Liahona Academy and other organizations that help troubled boys, focusing on topics surrounding social media use, teenage education, serious addiction issues, mental and behavioral disorders, and abnormal teenage stress. Follow Tyler on: Twitter | LinkedIn JacobsonParenting AdviceParenting TeensWays Parents Can Aid Teens In Becoming Financially Independent.   By Tyler Jacobson Help your teen save and make money. As a parent raising teens in this tough economy, I am actively working toward raising independent teens who have a strong handle on their finances long before they leave home. While I...Parenting Advice| Family Fun Activities for Kids