When trying to teach teens about money management, most parents put a lot of focus on limiting spending. While this is certainly an important part of budgeting, teens also benefit from learning about things like compound interest, credit card use, and savings accounts, too. 
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While it’s not always easy to explain these complex topics and help teenagers apply them to their lives, it can be done. Here are some tips to help parents give their teens a deeper, more well-rounded approach to money management. 

1. Encourage teens to have a steady income. 
Before teens can learn how to manage money, it helps if they have a steady income. Giving them an allowance is fine but for teenagers to really learn about money, getting a part time job is better. They’re more likely to spend carefully when they’ve worked for the money. Encourage them to work somewhere that interests them and inspire them to get the most out of their job. Depending on where they word, teens can learn basic business principles, effective ways of interacting with the public, or how to manage other employees. 

2. Have working teens cover their own expenses.
Once teenagers have a steady income, it’s time for them to begin covering their own expenses. This helps them learn to stick within a budget and live within their means. There are a lot of great budgeting apps that can help tech-savvy teenagers learn about budgeting and can even teach them a little about investing on a small scale 

3. Set up both a savings and checking account.
Teenagers with steady income should make regular deposits into their checking accounts and learn how to balance it. This helps them learn about ATM fees, overdraft fees, and gives them a chance to watch their account balance grow. 

Savings accounts are also important at this age to introduce interest rates and the benefits of saving money. It’s never too early to start good savings habits. Encourage teens to put 5 to 10 percent of their income into a savings account.

4. Help your teen set up a personal budget.
Knowing how to set up a proper, balanced budget is one of the most important things teenagers need to learn about managing money. It’s a skill they can use throughout their lives to prevent irresponsible spending and reach their financial goals. 

There are a lot of great apps available for budgeting or go the old-fashioned route and use a pencil and paper. 

5. Teach smart shopping. 
Teens are often impulse shoppers but teaching them how to shop smartly is something that sticks with them for a long time. Show them how to search for the lowest price, help them determine when it’s beneficial to hold off making a purchase, and how to reduce upfront costs when possible. There are a lot of apps for saving money when shopping, too.

Another way to save money when shopping (especially at the grocery store) is to make a list before you go and really stick to it. This avoids any expensive impulse purchases and helps stick to a food budget.

6. Be creative with saving money. 
A big part of saving money is spending less. Teach teens that small savings really do add up. Do you really need to go out to dinner and spend $40? Or can you go to the grocery store, cook at home, and have a fun night in for $25? What can you do with the $15 you would save by staying in? 

7. Have concrete financial goals.
It’s important to have a goal in mind so that all the hard work of saving money pays off. For example, if your teen wants a new car, encourage them to save up the money to pay for it outright or at least have a decent down payment.

While a certain level of financial responsibility is important at this age, it’s important to be fair in your expectations and invest in their growth. Helping to pay for college, cosigning on school loans, or helping them set up a small business in their early adulthood are all worthwhile. 

 8. Review their statements with them. 
It’s very important to talk openly and honestly with your teenager about how they’re spending their money.  Review their monthly bank statements and credit card bills if they have them to analyze spending habits. Encourage them when they’re doing well and help them identify areas where they can improve without judgment.

9. Talk about the household budget. 
Let teenagers know that what you’re teaching is important and applies to your own life. It also helps them realize the larger picture, that one day they might have a home and family and learning how to handle finances now can really help them later in life. 

Talk about income and managing monthly expenses as well as saving for retirement and building an emergency savings account. Another really helpful thing you can do is point out when you’re having trouble or areas you’re trying to improve. For example, talk to them when you’re faced with an unexpected and expensive car repair bill or explain how you’re budgeting for the summer vacation and why you chose the more affordable destination. 

Keep the Lines of Communication Open
It’s very important to talk to your teens about money and make sure they know they can come to you with any concerns. Being open and honest about your own financial history goes a long way to establishing trust and making your relationship with your teen stronger.

Any opinions are those of Thomas Fleishel and not necessarily those of Raymond James. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete.  Expressions of opinion are as of this date and are subject to change without notice.