4 lessons to raise financially successful teens

Parents were almost evenly split when asked whether they let their children have control over the money they receive (from allowance, gifts, etc.). According to MMI's recent Kids and Money Survey, 49 percent of parents say that they either give their children the total decision or most of the decision when it comes to what they do with their money. On the other hand, 51 percent of parents say they give their kids some say (as long as they don't spend the money on something foolish) or put the money into savings.

While it's important for parents to set boundaries and expectation for how teens are to spend their money, it is also important to empower teens to make wise financial choices on their own. Following are four ideas for raising teens that are financially independent and successful.

1. Wants and needs – there is a difference. Your teen may make a very convincing argument for why they think they need a brand new convertible when they first get their license, but you know better. A new car is a want, not a need. Our financial auto calculators may illuminate the financial ramifications of a need purchase versus a want purchase

2. Life comes with a BIG price tag. Help teens learn how to make smart purchase decisions and work with a budget. For example, give them the freedom to pick their own clothes when back-to-school shopping, but set a limit on how much they can spend. This allows teens to express themselves through their fashion choices, while also encouraging them to live within their means.

3. Problem solving. Ever heard someone diminish a teen’s problem with the phrase, “Well, in the real world…”? Don’t let that person be you! Sure, teenage problems may seem juvenile and petty at times, but they are still real problems to the teen involved. Give teens the opportunity to resolve problems on their own before you jump in with a solution, this will increase their confidence that they can weather any storm (including financial) and come out okay.

4. Teach them to be responsible for their actions. The teen years are not about making all the right choices, rather, the teen years are about realizing that all actions, whether good or bad, have consequences. If your teen makes an error in judgment that results in a speeding ticket, for example, let them pay the consequences, whether by paying the fine or taking a defensive driving course.

Do you have any tried and true lessons that helped your teen become a financially responsible adult? Leave a comment and let us know!

 

Alexis Holloway is a former copywriter and e-Commerce Coordinator for MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.