If you grew up in a household where money talk was taboo, now’s your chance to break the cycle. Across the board, experts agree that the number one thing parents can do to raise financially capable kids is to communicate with them early and often about money. According to Ron Lieber, author of The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous and Smart About Money, teenagers “need to be ready to make the right financial decisions. You can’t lose your 20s financially anymore. You just can’t, or you’ll work for the rest of your life. To me, this is an act of protection.” In his book, Lieber adds, “every conversation about money is also about values.” Here are six steps you can take to ensure your kids’ health and safety—mind, body and bank account.
6 Ways to Raise a Financially Responsible Teen
1. Follow Finance Influencers Together
The way to a teenager’s heart is through social media. Spend downtime together getting to know “finfluencers” aka finance-focused TikTokers, Instagrammers and YouTubers, and you’ll soon have financially literate humans living under your roof. Some of our own personal finance faves? Let’s start with Berna Anat aka @HeyBerna. A self-styled “financial educator and hypewoman,” this irresistible podcaster/author tackles tough topics like investing and digging out of debt with humor and heart. She even makes budgeting sound fun by breaking hers down into categories like “Adulting (bills, rent, healthcare), Your Fun Account (things you want but don’t need, the treat yo’ self purchases), and Your Savings (future $$ goals. Leave her alone. Let her sleep).” Honorable mentions: Tiffany Aliche (@thebudgetnista), Taylor Price (@pricelesstay) and Spencer Hawk (@spencerhawkk).
2. Give Them a Budgeting Lesson, then a Lump Sum
“The most common mistake I see parents of teens making is teaching them how to save without teaching them how to spend,” says Monica Eaton, a certified financial education instructor, commercial banker and author of the children’s book, Money Plan. “This becomes especially important when a teen’s bucket of savings is supposed to be used for multiple purposes.” For Lieber, the conversation sounds like this: “You know we want to get you ready for your life as an adult… We will give you that entire lump sum, and you’ll be in charge. If you want Victoria’s Secret underwear and you’re willing to buy the coat at Goodwill or if you want just one pair of jeans that are 7 for All Mankind and cost $180…well, that’s on you. But don’t come to us when you run out of money because this is what you get for the year.”
3. Set Goals—and Name Bank Accounts Accordingly
Consider opening a high interest savings account for your teen and helping them set up automatic transfers into it. “Making sure your teen understands the importance of saving as well as budgeting is critical,” says Eaton. “Having a financial goal to strive for makes it easier to stick to a saving and spending plan.” Laser focusing on a big, important goal helps quiet the noise that can eat away at a budget. So the next time your teen wants to grab dinner with friends, suggest she put that pizza money into her “sweet sweet ride” account instead.
4. Be Transparent About Family Finances
Give your teens a seat at the table as you budget out your next vacation or monthly household spending plan. Demand discretion—but allow them to stay within earshot—as you talk about salary negotiations at work, or whether to take the better paying job with longer hours (and what that will mean for your lifestyle). “One of the most important things parents can do to raise financially responsible teens is to model positive financial behaviors,” says Eaton. “Before teens ever hear what you say, they see what you do. Try to make sure that your own financial behaviors are in line with the behavior you’d like your child to exhibit.”
5. Educate Them About Extras
Often, it’s the little expenses that add up to blow our budgets or eat away at our savings. And we’re not just talking about glaringly stressful fees like compounding interest on student loans: paying sales tax on new clothes, tips for servers or hairstylists, springing for expedited shipping from Amazon, grabbing a Starbucks instead of pouring a coffee at home. Shine a spotlight on those cumulative costs that tend to escape teens’ attention.
6. We Don’t Talk About…Debt
Student loans. Credit card debt. Over-spending. Under-saving. Car loans. Mortgages. Medical costs. Interest fees. The worries that swirl around parents’ brains are often fueled by what we owe, to whom, and how soon. Rather than shield kids from these concerns, be open about them—within reason. The goal is not to create additional anxiety or make home life feel unstable. But owning up to our pressures or even our mistakes—and talking them through the steps we’re taking to set things right—helps kids avoid repeating them. “If you’ve made financial missteps as a parent, know that you’re still the person your child needs to hear from when it comes to money,” says Eaton. “Lead with transparency. Let your child know that you’ve made some mistakes, and you want to help guide them towards better decisions.”