Category Archives: Teens & Money

Teens and money: a perfect recipe for developing some dangerous  freewheeling attitudes about spending.

Kids see money in terms of the future. What can I buy next? Adults see money in terms of the past. How can I pay for all my obligations?

Parents can help their teens bridge this gap by using use the ideas in The No-Cash Allowance. Consequently, they can give their kids real-life money management skill practice before they become adults.

This Cell Phone Lesson Teaches Teen About Money

A cell phone lesson teaches teens about money
A cell phone lesson teaches teens about money

How can you use money to teach a teenager a lesson that sticks longer than a nanosecond? One reader of my book did just that with his teenage daughter.  He used a cell phone lesson to teach about money responsibility.

When his daughter’s cell phone broke (oh, the horror) she told him about her dilemna. She begged her dad to buy her a new phone.

In response, he looked at her and calmly said, “Remember, we agreed that you pay for your cell phone expenses. Use your own money to buy a new phone.”

“My own money!” exclaimed the daughter. “But I don’t have enough. Can you give me the extra?”

“Sure,” said the dad. “If I will lend you money I’ll charge you interest.”

“But you’re my dad,” she said, “How can you do that?”

“Because I am your dad, I can give you some of my money but I going to charge you interest. You get the money now and I earn a little for lending it to you,” he told her.

“But that’s not fair,” she said. “You could just give me the money. It’s no big deal to you.”

“The point is that you need to understand how money works in the real world,” he said. “When you borrow from a bank they charge interest. And they charge penalties if you don’t pay it back on time. Here’s your choice. Consequently, you borrow from me and agree to pay the interest. Or you wait until you save enough money to replace your phone.”

How to Create Your Own “Cell Phone Lesson”

  • First of all, provide money regularly to your kids, with opportunities to earn more. Use a cashless payment method to make payday easier for you.
  • Then, let kids have complete decision-making ability their money. Spending mistakes for kids teach big lessons and are not life-changing mistakes.
  • Most importantly, assign spending responsibilities for kids to manage. In the example above the daughter was responsible for her cell phone expenses and needed to accept the consequences.

The cell phone lesson is one way of helping a kid understand how money and reponsibility go together. Require kids to use their own money to cover some of their day-to-day expenses. As a result, you, as a parent, lay the groundwork for them to manage money as an adult.

Lynne Finch helps parents teach their kids about money from piggy banks to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” she says. Follow Lynne’s common sense approach for teaching children that money is a number.  The No-Cash Allowance provides a guideline for teaching about money to kids from pre-school through high school. 


Teen Spending Habits Create Unrealistic Approach to Adult Life

Teens live in the best of all worlds moneywise. Teen spending habits show that they spend a lot of money. However,  teens have few responsibilities or obligations for their spending habits.

What do teens buy?

The Piper Jaffray  25th semi-annual project “Taking Stock With Teens”  begins with an overview of teen spending by category.

teen spending

Teens don’t have regular bills, debt, loans, insurance payments, and mortgages. Consequently, they can walk into the mall with a carefree attitude about spending. But is this a good way for them to prepare for adulthood, just around the corner? What is teen spending teaching them about money management?

What do teens expect to earn as adults?

We know many teens spend without much responsibility. Furthermore,  they also have an out-of-this world expectation of their earning as adults.

According to a 2007 Schwab Survey teenage boys expect to make an average of $174,000 annually, while girls expect to earn $114,000.

The reality is that in 2014 the median household income was $53,482 and per capita 12-month income was $28,555.

Why are teens so unrealistic about money?

In today’s society kids receive money at an early age. Usually they can spend it any way they want. As they grow they have more money but little responsibility for their expenses.

Over the years kids develop free-spending habits that will be difficult to break. The most critical years are those last few years before becoming a legal adult—the teen years.

One of your responsibilities as a parent is to guide your kids through a transition to the adult world of money. You can do this by creating a semi-independent stage for your teens. Consequently, they can  assume responsibility for more of their own day-to-day expenses, such as school, transportation, and education.

Make teen spending include real expenses

You can do this by using the strategy explained in The No-Cash Allowance. What you will be doing is transferring money that you would spend to your teen to manage. This includes keeping track in their accounts and paying for the expenses on time.

As a result your teen could manage funds in high school for most of their day-to-day spending. This can include clothing, entertainment, education, extra-curricular activities, and phone expenses. Such an approach prepares teens for adult spending responsibilities.

Even though you may be providing most or all of the funding the key is to transfer responsibility to your teen to manage the money certain personal expenses. In creating such a real-world money situation, The No-Cash Allowance provides a consistent process that teens can use to learn how to manage money for real-life expenses.

Lynne Finch helps parents teach their kids about money from piggy banks to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children that money is a number with kids as young as pre-school and continuing through high school.