Teens are fascinating animals. For their parents, they are a constant source of frustration and joy, shame and pride. Sometimes it feels like you just can’t teach your teen anything. Simply because you’re their parent, it feels like they will resist anything you telling them. I think it’s a pride thing. They don’t want to admit that your might actually know something, after all.
Have you ever tried to teach a kid about money? For little kids, the piggy bank is a great idea, reinforcing the idea of saving for later, or even by having separate piggy banks for separate goals. Eventually, they outgrow the piggy bank, and you introduce an allowance. That’s usually when the disagreements start, right?
So how do you teach a teen how to manage money responsibly? You have to be sneaky. You have to let a teen THINK that they’re figuring this out on their own, when in reality they’re following a carefully laid plan. As Admiral Akbar famously said, “It’s a trap!”
A Simple Plan: A New Allowance
Are you ready for the plan? Here it is: Give your teenager a new allowance.
Okay, I admit, this might sound a little shaky. Maybe I’m just a little short on the details. I’ll try to fill some in:
Teaching kids about money is a multi-step process. They’ve got to learn five things before you can declare victory
- Learn how to spend money
- Learn how to earn money
- Learn how to save money
- Learn the value of money
- Learn to manage an allowance
5 Steps? Sounds easy!
Unfortunately, these steps aren’t necessarily taken in that exact order every time. Toddlers can start at phase one and move pretty quickly to step 3 or 4, but their scope of understanding is going to be limited to very small dollar amounts. Teens are going to be having opportunities to earn potentially hundreds or thousands of dollars, are thinking about saving up to buy cars, and can be managing allowances of $200 per month or more. They’re going to be revisiting those early lessons often as their financial opportunities and responsibilities grow – and an allowance is a VITAL part of that growth.
An allowance is a great teaching tool, that lets the teen revisit these five lessons over and over as their allowance grows, and their responsibility grows.
Demand Allowance Mistakes
Kids learn about money only when they make mistakes with money.
You’re giving your kid an allowance for several reasons.
- First, you’re giving your kid a chance to practice making decisions about money.
- Second, and more importantly, you’re giving your kid a chance to make mistakes with money. Expect it to happen. It needs to happen. And when it does, it’s your job to be caring and loving, not to point out the “lesson learned.” Your teen gets it. If you point it out, though, the lesson will be lost.
- Finally, an allowance is going to make your life easier. Really! If your teen is going to be managing most of his financial decisions, that means you don’t have to. It’s just one less thing to worry about.
So that probably leaves you wondering, “How exactly do I start my teen on an allowance?” I’ll tell you exactly how to do this… in my next post.