Teaching Teens About Money
Teaching Teens About Money
My husband and I make a decent income. We're professionals with our own business, but we took out nearly $100,000 in student loans to get our degrees. Our kids (six of them) have never lived a lavish lifestyle (We have old cars, I shop for clothes at thrift shops, clip coupons etc.) but still somehow can't comprehend the value of money and things. For example, one daughter wanted to spend $30-$60 on a dress and another $30 on shoes for her homecoming dance. The children whine, pout and argue over us buying them stuff all the time. When I give them the speech about getting a part-time job, budgeting their money, and alternatives (like the thrift store for the dress) they just get angry. Then they try and talk their grandparents into getting what they want; their grandparents have less spending money than we do! Help! How do I teach my teenagers the value of money?
Give Them a Budget
My solution to teaching teens about money was that I gave each teen a specified amount of money in August to spend on school clothes. It could be $100, $500 or whatever your budget allows. Make it clear that that is all they are going to get out of you. If they want to spend it all on a few designer clothes at regular price that is their choice. If they shop carefully they will discover they can have more clothes. To begin with I would also give them another allowance in the spring for their summer wardrobe. The key to making this work is not giving in to their begging and whining. I also bought their underwear because I would find it on sale and they weren't fussy about it. If they want more clothes they will discover that a part time job will help. If the job is their idea it will work much better than if the parent forces them to work. Make sure that you are specific about Prom clothing months ahead of time. Tell them the exact amount you will give them for the occasion and anything over that they can do without or earn their own money.
This worked wonderfully for us and there is not the constant bickering and battles about clothes.
My Clothing Allowance
When I became a teenager, my parents instituted a clothing allowance for my sister and I. We were both given $250 a year to spend on clothing, which we could spend any way we saw fit. Then when it was gone, it was gone, no whining, or begging allowed. My parents did agree to cover necessary expensive items such as winter coats or boots when needed, but everything else was completely up to us, which included my prom dress when the time came. I learned pretty quickly that ultra-trendy low quality items were a big waste of money since you couldn't wear them more than a year or two because they either wore out or were hopelessly out of style. While the clothing allowance didn't turn me into a financial genius overnight, it was the first step I took on the road of learning how to responsibly manage money to cover one of the necessities of life, and I plan to implement this policy with my own children when they reach their teens.
I had a similar situation with my son when he was 7 only instead of clothes, it was school supplies. He went through a new box of crayons every month. So I decided to give him some control of the school supply money and give him some incentive to save. The next school year, we bought him his "starter set" of school supplies at the beginning of the school year, then gave him one dollar a week for school supplies. He was responsible for buying any replacement or new supplies that would come up during the year. At the end of the school year, he could keep whatever was left. That year, he got through the whole year on one box of crayons. He bought himself a toy with the extra money.
I suggest that you do something similar with your children. Give them $5 a week. They can use their regular clothes and make them last so that they can save and splurge on their party clothes, or they can buy a few pieces of everyday wear all along and try to be creative in getting their party clothes.
Mary Hunt has a wonderful new book out called Debt Proofing Your Kids. You should buy it. It addresses all of the issues you are dealing with and very successfully! Basically you give the child a monthly "salary" that is to cover all of the expenses you expect to crop up. It is a set amount and you set in advance all the things you expect the salary to cover. The child must also save 10% and give 10%. As the age increases so does the salary and the list of things it must cover. The hardest part of the system is that you MUST sit back, keep you mouth shut and let the children make their own decisions. When they make mistakes and can't go to functions because they spent their money foolishly, you DO NOT bail them out. They learn!
Julie in IN
When I was growing up and was at the age of earning money my parents set up a work program so that we earned our allowance. We got what we earned. each chore had a set amount of money for example setting the table was .15 cents and mowing the lawn was 2.00 or so I can't remember the prices but if we wanted more we had to do more.
Another way they taught us was if we wanted something in particular and it was expensive they would half it with us. For my brother to get designer jeans he had to pay half which was not cheap. but he wanted them and it was worth it to him. He also wanted to get Adidas shoes but had to make them last 1 year because it would cost mom the same for him to have 4 pair of off -brand shoes which would last 1 year to his 1 pair of Adidas - he made them last for more than the year.
Include the Kids
I feel that I didn't learn the value of money as a child and I think it was because I was never included in the budgeting process. What I recommend is to include the kids in the budget process.
Tell the kids that there is a budget meeting one evening that they all must attend. The meeting will determine their monthly allowance, from which they must buy all their clothes. (Keep school lunch money separate, or they will skip lunch to buy clothes.) They should eagerly come to the meeting.
Get your monthly income in real money, or play money. It will look like a million dollars to them. Then apportion it out - the fixed expenses like mortgage, insurance, utilities, food, etc., the entertainment expense, gas, car washes, everything. Have this all figured out ahead of time so they don't get bored.
At the end, you will have a small pile of money left, which you can divide up among the kids. Tell them this is how much is left over for them. They will realize how little is left, and might even come up with ways to save money, once they realize that eating out is a tradeoff for getting a new pair of shoes.
And finally, if they are "arguing, pouting, and whining" then they must feel it is worth it, i.e. sometimes it works. Don't give in!
In dealing with my teens I have found that if I set a price on an item...for example, high price tennis shoes...I will pay no more than $25..anything over that price, they must pay the difference...anything under that price, I pay them the difference. This way they will search the Sunday paper for the sales...since there is an added benefit (cash in the pocket) their original requests frequently become much less expensive. In addition, since this is their purchase, they can't blame anyone but themselves
OK, so it's pretty obvious the lecturing to your children about money doesn't work. I took a parenting course called "STEP", (Systematic Training for Effective Parenting). They have a wonderful manual that you can purchase in any bookstore: "The Parenting Handbook" by Don Dinkmeyer & Gary D. McKay. They teach you how to relate more effectively to your children and cover problem solving, mutual respect, effective listening, empathy, encouragement, understanding behavior ,improving relationships and using logical and natural consequences.
Letting them earn what they want through chores would be a mistake. Chores should be a normal part of family life. If they get allowance, they could save for what they want. They could go out and do chores for others in the neighborhood who could use the help, but perhaps cannot afford to hire professionals. (Ex: lawn care, light yardwork, window washing, snow removal, babysitting...). Encourage their independence. Avoid doing for children what they can do for themselves. Refuse to fight or give in. Schedule regular family meetings using the time to discuss wants and desires and brainstorm as a group how these goals can be achieved. (Be sure to let the grandparents know the outcome so they don't get sucked in when the kids come begging!)
Money Textbook for Kids
There is a book entitled Money Doesn't Grow on Trees and many of my co-workers (teachers) have used it with their kids and I plan to with mine. It maps out a plan on using allowances to teach children about taxes, cost of living, etc. By actively participating in the things adults must face, children in turn learn about money and how not to take having it for granted.
I have two teenage daughters and yes its tough to teach about money bit its not entirely impossible. What you may be overlooking is that, you are trying too hard to make them accept your way of thinking, you are getting frustrated because you feel that since you have used cars and shop at the thrift store and so on and so on, you feel that they should naturally understand and do the same. Thats not how it works, they are only going to resent you more. The answer to this delima is COMPOMISE COMPROMISE COMPROMISE, children like to see fairness and for their feelings to be understood, just as you do. Example: The homecoming is an important night. Show your child you understand the importance of this and explain this to your child that you feel and can relate. It is an important event therefore you are going to do what it takes to buy that $60.00 dress and $30.00 shoes. And if they agree to being frugal in other areas then you will be able to accomodate them on special events. So you see, feel that they have some choices and they do feel that you want to provide all that you can but there will be times that they will have to be thankful for whatever you are able to give them. You will find that they will be more accepting and less resentful.
A Checking Account
I've actually started this with my almost 7 year old. He has his own "checkbook." All the money he earns doing extra chores (not the ones assigned already) is entered into his checkbook register, as is all of his birthday and Christmas money. It's not in his hand so he doesn't think about it as much. When he needs something (wants?), he writes a check out to me, and I give him the cash he's requesting and it gets deducted out of his register. All additions and deductions are initialed by myself or my husband so that we know it's been authorized by us. He learned quickly that his money added up fast since it was "such a pain" to have to request it, and when he would see a fair sum in his book, he would think "okay, I need this much more to get ????" Once he learned that, his saving money was a SNAP!!!
Suggestions from a Teen
I'm 19. I would say I'm a little spoiled, and my family is not poverty stricken. However, I appreciate the value of money. One thing my parents started to do to me when I got my license was to send me shopping for them. This seems silly, but it helped me realize the value of money.
They would give me x amount of dollars and a list of groceries, and send me to the grocery store. Whatever leftover I had I could spend for myself as a reward for shopping (normally 2 - 5 dollars for about an hour and a half). However, I had to get everything on the list. This forced me to look for the best deals at the store, and helped me to appreciate how much things were.
Another thing that helped me learn the value of money was my parents method of buying clothes for me. They would match however much I was willing to spend. If I chipped in 2 hundred dollars, they would also chip in 2 hundred. As I got older and got better jobs, the amount they would chip in got smaller and smaller until it reached zero.
Finally one thing my parents helped me realize that was useful was the value of work. They always made it clear to me that work wasn't always fun and didn't always seem necessary, but no matter what I thought I had to do it. This helped realize that the whole world didn't revolve around me, and also helped me realize that the feeling of a job well done is a reward in itself.
Take the Next Step
- How a teen clothing allowance can teach them about money and clothes!
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