Teens can learn good money management habits

September 03, 2004|by LYNN F. LITTLE

Teens spend more than $140 billion a year in the United States. Teens spend on average $83 per week. The average amount goes up with age ($53 for ages 12 to 15; $103 for ages 16 to 17; and $125 for ages 18 to 19). Two-thirds is their own money (jobs, allowances, etc.) and the other one-third is family money.

Since, for the most part, teens have their needs met, much of this money is spent on discretionary or nonessential items. This premature affluence is a concern to financial management experts. It can create problems when teens become responsible for paying for their own necessities, if they have not developed good money habits.

Though it's important to start when children are young, there are things you can do if your child already is a teenager. Consider engaging your child in some of the following activities to learn about healthy money habits:


· Allow teens to experience the good and bad consequences of their spending actions.

· Discuss how a teen's earnings are distributed between expenditures and savings, and clarify who pays for what.

· Help teens understand personal wants and needs related to the decision of buying or not buying an item.

· Encourage teens to save first - not last - and to save regularly.

· Encourage saving for long-range goals (major purchases, gifts, college).

· Help your teen learn about the benefits of compound interest and saving to buy, so they don't have to pay to use someone else's money (interest).

Give lessons in comparison shopping:

· Let teens do the family grocery shopping.

·n Suggest your teen talk to the insurance agent where you purchase auto insurance.

· Subscribe to a consumer product testing magazine, and discuss the comparisons made with your teen.

· Encourage comparison shopping for goods and services (unit prices, sales, compare between stores and/or mail order, Internet, etc. - don't forget shipping and handling costs).

· Involve teens in getting information for a long-term financing arrangement for a car or education.

· Visit various types of financial institutions and compare rates and services.

· Analyze advertising and promotion campaigns with teens.

Teach budgeting:

· Involve teens in planning and budgeting for the family vacation.

· Compute miles per gallon on your car.

· Help teens set up a spending plan to cover fixed and flexible expenses and savings.

· Help teens develop a simple record or filing system for personal expenses.

· Identify potential risk or loss and discuss ways to deal with it (i.e. savings, insurance).

Be generous and wise:

· Help teens identify gifts that require an investment of both their money and time.

· Point out opportunities to donate time, energy and skills to religious or community projects.

Brace teens for the work force:

· Before teens apply for jobs, discuss work hours with regard to study time and household responsibilities. You may limit hours per week or require a certain grade point average be maintained.

· Decide whether or not an allowance should be continued if a teen has a job.

· If they are employed, help teens complete income tax forms.

· Help teens develop good work habits (being on time, etc.)

The processes of earning, spending, borrowing, sharing and saving each teach different important money management concepts. Help your teen learn healthy money habits.

For more information on talking with teens about money, go to on the Web; click on money management.

Lynn F. Little is a family and consumer sciences educator with Maryland Cooperative Extension in Washington County.

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