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Teenagers learn by gradually taking on more and more responsibility. For many parents, this involves giving their children a limited amount of control over financial decisions. If you choose to give your teen an allowance, take the time to teach them how to manage their money and control their spending. After all, most teens report learning about money management from parents. Establish an agreement on what the allowance covers. Consider providing extra income opportunities to help them learn that money is something you earn, not something you are entitled to. This is also a great way to get them involved in extra family chores.

Another effective tool is to get teens involved in a major purchase, such as the car buying process, whether the car is for them or for the whole family. Discuss with them such issues as what the car can be used for, who is responsible for gas and maintenance, and who can actually drive the car. Show them how auto insurance works, including how much the premiums increase when they start driving, as well as how much it rises if they have an accident or traffic violation.

Involve teens with your day-to-day personal finance decisions, such as grocery shopping. Have them help you with the grocery list and show them how to comparison shop, by pointing out how much money you save through comparing prices and using coupons. You can even ask your child to help cut out coupons, go through the sale papers, and develop the grocery list for the week. In addition, let them sit with you while you pay the bills, so they can see how much monthly obligations like utilities, phone bills, the mortgage, and insurance, add up.

Encourage teens to save their money for a major purchase and even offer to match their savings with an additional 50 cents per dollar saved. This is a great way to teach them the relationship between building a savings account and the positive rewards that follow.

Finally, teach teens how credit works and how to use credit cards responsibly. You might even consider showing them your bills when you pay them. Too often, young adults who get their first credit card perceive it as “free money,” and find themselves in debt very quickly. Don’t wait until your child is in college and inundated with offers for free stuff in exchange for opening a credit card. Help them understand that the $50 they charge today costs a lot more if they don’t pay it off quickly.