Personal Finance for Teens

When the average teenager finishes high school and is old enough to leave home, many of them rack up very high debt and have substandard money management skills. In a lot of cases, they weren't taught by their parents or anyone else how to use credit in a responsible way or how to make and adhere to a budget. That's why it's more important than ever to instill good money management habits in your children, and in this guide, you will get some strategies on personal finance for teens.

*You can start teaching your kids how to manage money at an early age, by giving them an allowance. Kids and teenagers are constantly asking for money for this or that, and rather than 'cave in' every time they ask for money, give them an allowance every week. A good idea is to base the amount on their age or the number of household chores they've done, and once they've spent their weekly allotment, they'll have to wait until their next "payday". This teaches kids about spending on needs vs. wants, and prepares them for the real world.

*If your child is old enough, encourage them to get a part-time job. Some teens don't realize the value of a dollar, or how hard they must work to earn it. You can require that your 16 or 17 year old get a job, to pay for their extras, such as clothes, designer shoes, and entertainment. After working hard and making seemingly little, they will be much more likely to appreciate the true value of a dollar.

*Teach them how to draw up (and stick to) a budget. Once they've found that part-time job, sit down with them and show them how to make a budget. Factor in car payments, gas money, tolls, etc., and show them how to set aside money for their needs before spending on "wants". Not budgeting correctly can result in overspending and not having enough money for bills.

*Allow your older teen to get a low-limit credit card. A lot of adults get their first credit card when they go to college, and having never been educated about the responsible use of credit before, they spend indiscriminately. Before your child goes off to school, let them get a low limit card (let's say, $200). Monitor its use, and make sure your child pays the balance and spends carefully. That way, once your child has left home and gotten their own credit, they are not as likely to abuse it.

*Show them how much you pay in bills every month. Without giving away too much about your own finances, show your children your household's expenses such as rent or mortgage, utility bills, car payment, and car/health insurance. Some teens don't realize the cost of running a household, and they assume that Mom and Dad have an unlimited amount of money. Showing them how much you pay can prepare them for when they have a household of their own to run.