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. 


Parents: Give your kids a money makeover with the allowance strategy in this book

Mom using new allowance strategy with daughter
The No-Cash Allowance: A mom uses new allowance strategy with daughter to add a deposit to account log.

A magical thing happened on the way to the piggy bank.  As a result of being a check-and-credit-card mom I never had cash to pay my kids their weekly allowance. Clearly I needed a new allowance strategy.

I realized that because I managed without cash, they would learn to do the same. Consequently,  I stopped giving my kids allowance as cash.

With my new allowance strategy, I started paying allowances as a number. Problem solved.

Because numbers never lie it was always clear who got paid and when. There was no more dumping out of piggy banks to count the money because the numbers told it all.

This no-cash payment plan became the basis for The No-Cash Allowance, a guide for parents to teach their children money management. Kids learn to manage cash and cashless transactions for both fun and necessary spending.

A no-cash allowance is a system in which a child controls all funds received from parents through a written account initially kept in the home. Adults act as bankers and the child as account owner.

A no-cash allowance strategy in practice

One daughter opens her account, adds her weekly amount and records the new balance. She announces that she has enough to buy a new sweater. Her sister updates her own account and asks to stop at the bookstore. We shop. I pay using my credit card. When we get home they subtract their shopping expenses and update the balances in their accounts.

Throughout this experience no cash exchanged hands yet everyone knows exactly what happened. Money is deposited, balances grow, purchases are made and consequently, balances shrink. The kids proudly took responsibility for their own spending decisions and accepted the resulting change in their account balance.

The most difficult part for parents is giving up control and letting the kids make the decisions. Remember that scary feeling when you knew you had to let go of your child’s bicycle. You expected some bumps and bruises. The same thing happens with kids learning to control their own money.

Kids like the challenge of being in charge of their money; they like making decisions. Our mantra was, “It’s your money. You decide.”

We had to bite our tongues to avoid telling them about a spending mistake we could see coming. Yet, we knew that a $10 mistake by a kid would be a gentle lesson compared to a maxed out credit card as a young adult.

No-cash allowance strategy explained in book

Because I believed in The No-Cash Allowance after seeing the result with my own children, I invested my own money to write and publish the book to share with parents like you. The book is about kids and allowances, but more importantly it is about kids learning to make and understand their own decisions using money as the learning tool.

When my book finally rolled off the press our children had flown the nest. Yet, we knew that our allowance strategy succeeded because they never once called from college to ask for money and never moved back. Our children now have children of their own, who are learning to manage their money the no-cash allowance way.

As a mom, I set out to teach my kids about money. What they learned reached far beyond dollars and cents. My children learned essential life skills like confidence, decision-making and responsibility.

I believe your family can be as successful as we were.

The bottom line is that this allowance strategy shapes behavior through positive reinforcement by empowering children to make real decisions.

In the end, this mom learned that it wasn’t about the money at all.

Lynne Finch helps parents teach their kids about money from piggy banks to online banking. Buy The No-Cash Allowance today and follow her common sense approach for teaching children that money is a number.