Six Ways to Help Teens Manage Money

By Alex Veiga AP Business Writer | 7/12/2013, 9 a.m.
Your teenage kids may be old enough to get a part-time job and start taking college prep exams, but do ...

Your teenage kids may be old enough to get a part-time job and start taking college prep exams, but do they know how to manage their money?

Parents can get their teens started on the road to financial literacy by taking advantage of ways to teach them concepts like making a budget, balancing a checking account, using credit wisely or saving for retirement.

That’s because parents can have the biggest influence on their children’s behavior when it comes to personal finance, says Patricia Seaman, senior director of the National Endowment for Financial Education, a nonprofit focused on financial literacy.

"Even if you don’t feel like you know enough or feel you were raised in a money savvy environment, you still can overcome that and give your kids a good foundation," Seaman says.

Here are six ways to instill your teens with money management skills for college and beyond:


Personal finance education should ideally begin when children are in elementary school. This is a good time to establish an allowance, say for doing chores around the house.

One strategy is to get kids to regularly save some of their allowance, and donate another portion to church or a charity of the child’s choosing.

When a child is between 5 and 10 years old, it’s an ideal time to set them up with a child savings account. That can help children begin to learn the value of saving and compounding interest _ even if the small return might not generate much excitement for young kids.

Many banks offer savings and checking accounts tailored for young children as well as teens. Capital One Financial’s Kids Savings Account currently offers a 0.75 percent variable annual percentage yield with no fees or minimum balance. And Wells Fargo’s Teen Checking account lets parents set daily limits on debit card purchases and ATM withdrawals.


It’s important to hold teenagers accountable for their financial choices. This could take several forms, like requiring them to pay for their own monthly mobile phone subscription or the online account on their video game console. Money management lessons can be found by giving teenagers a clothing allowance and letting them buy their school clothes on their own.

And even if they elect not to spend wisely and end up with, say, one pair of fancy jeans and not enough socks or underwear, that’s OK.

"You want them to go ahead and make small mistakes with not very much money while the stakes are still fairly low," Seaman says. "If it is something absolutely critical, you could make the decision to bail them out."

In this spirit, parents might also consider giving teens an ATM card to access an account with a limited balance and no overdraft protection. Another option is a prepaid Visa or MasterCard with a set limit.


Your kids will likely have to rely on their savings and investments to help cover expenses when they retire.