Common financial problems for teens and how to resolve them

Common financial problems for teens and how to resolve them

Do teenagers worry about money? In a nutshell, yes, they do. Like adults, they have their own financial worries and problems, but unlike many adults, they often need extra advice and support to resolve them. Here's how to help them solve their biggest money worries.


Our Youth Economy Report found that 66% of kids surveyed worry about money. Louise Hill, co-founder and COO of GoHenry, says, "Anxiety about money, combined with a lack of financial knowledge, is a tough mix for teenagers. Our research has shown us that most young people worry because they don't have the financial knowledge they need to make better decisions. To help lower the risk of them developing risky financial habits, we need to help educate them and show them how to resolve their financial worries and problems."


Luckily there are many ways you can help your teen not only deal with their financial worries but also safeguard them from future financial risk. Here's what you need to know.


Related: Money management for teens




Not earning/having as much money as their friends


Somehow teenagers never have enough money, simply because there are always so many things they want to buy and do! This, alongside a weak ability to budget, means they always feel like they’re short of money. What can help here is to talk about budgeting to teens so they learn to prioritise their money and say no to friends when they can't afford to come out.


Alongside this, give them some ideas for how they can change the situation by earning more. Our Youth Economy Report 2022 found that more than seven out of ten kids (71%) say that making their own money is important. Moreover, the entrepreneurial spirit is alive, with a quarter of kids and teens (25%) now earning from selling things on online marketplaces such as Etsy, eBay, Depop and Vinted.


Not being able to buy what they want


Not having the same amount of money as your friends is brutal for teenagers because no one wants to be the outsider who can't afford to do things or buy things. What can help here are some honest conversations around how there will always be people better off and worse off when it comes to finances.


Also, ask teenagers to look at where their desire to buy things comes from. Is it their friends and or social media? If they are adamant that they want something, talk to them about saving goals. This means not just putting money away each week (you can set up saving goals on GoHenry) but also saving money when they are out and about. For instance, forgoing bubble tea or a latte (a saving of £4), signing up to websites like Student Beans, and using vouchers and discounts when going out to eat (often a saving of around 15%).


Related: Explaining needs vs wants to your child


Spending more money than they earn


Clinical psychologist Linda Blair says, "most teenagers have low impulse control and trouble waiting. So a typical teen will see something and instead of thinking about the practicalities they feel compelled to act and spend immediately."


As a parent, you can help them avoid this by asking them to:


  • Stop and think 
  • Check (on google) whether they can buy it cheaper elsewhere
  • Work out how much they will wear it/use it


At the same time, model good behaviour when you are out shopping together, showing them that you do all of the above, and talk to them about the perils of impulse buying.



Family financial troubles


At GoHenry, we believe parents should speak openly about money in an age-appropriate way.


 "At the moment we're all bracing ourselves for price rises and possibly the sharpest annual cost of living raise since the 1980s,” says Louise Hill, co-founder and COO of GoHenry. “This brings money into focus and reminds us how important it is to talk to kids about the importance of saving money and spending responsibly. It might be as simple as explaining why the family is cutting back, and certain things that the kids consider 'essentials' may no longer be around."


Significant life changes like the cost of living crisis, redundancy, and divorce all affect family finances. So if you’re affected by any of these issues, help teens understand what's happening and talk about how you are tightening your belts as a family, rather than simply telling them you have no money.


Get them involved in decisions around what you can all do without and what you'd all rather keep, so they feel they have a say. At the same time, balance this with helping them resolve how this will affect them with discussions around how they can earn more, and reassurance around how you still have a good life even without some extras.


Borrowing money from friends or paying for friends


Peer pressure during adolescence is normal and tends to peak around age 15. Teens get better at setting boundaries with peers by age 18, but until then, money is the one area that can cause problems.


Firstly, teens rarely think of the consequences of borrowing money from friends. They tend to think in the moment and don't consider whether they have money to pay their debt back or how they will find the money. As a parent, you can help them by talking about debt, borrowing (credit) and how fast debts can spiral out of control – and also make sure they know they can come to you when they make mistakes.


The other area teens can find problematic with money is generosity. While we all want our kids to be kind and generous, it's also vital for them to be savvy with their cash and not always step in to pay for friends. Talk to them about boundaries around lending and paying for others (and suggest what they can do if friends don't have money, such as choosing to do something that doesn't cost money or looking for discounts.)


Related: Credit tips for teens

Struggling to meet savings goals


If your teens struggle to meet their saving goals, this tends to mean one of two things. Their savings goals are too rigid, as in they are saving more than they can afford (or want to save), or their goals are too long-term, so they feel demotivated.


It can help to set short-term and long-term savings goals. The short-term plan aims to show them how quickly and easily savings goals can be reached to motivate them to achieve bigger goals.


GoHenry can help them with this, as you and your teen can set savings goals within the app and track the progress of the savings. This way, you can tweak it whenever you need to.


Not having any savings


1 in 10 Brits (9%) have no savings. In 2020, the average person in the UK had £6,757 saved, but 41% of Brits don't have enough savings to live for a month without income.


"Teaching your kids and teens to save forms a habit for life," says Louise Hill, co-founder and COO at GoHenry.  “This is why we created savings goals on the GoHenry app, to help encourage kids to establish control over their spending and work towards what they want to buy."


One way to encourage reluctant teen savers (because let's face it, not everyone is a natural saver) is to offer savings incentives. If your teen sets up a savings goal for new trainers, offer to round it up if they get to 80% of the goal. Or offer a bonus (or pay interest) if they reach their savings goal.


Unable to keep track of money and spending


One in five UK adults don't keep track of their monthly spending – which is one of the reasons why many parents forget to give this crucial piece of advice. Tracking your money is key to establishing better spending and savings habits – and this is where Gohenry can help. You and your teens can track all their spending and save within the app with notifications highlighting when they have spent money.


Alongside this weekly spending, single item and ATM limits can be set by your teen if they want to ensure they don't overspend.


A lack of financial literacy


Handling your finances is more complicated than it appears. To make money work for you, you must know how to budget, save, delay gratification and tell the difference between needs and wants. It's a big ask for teens who have more serious issues on their minds. Yet, financial literacy is an area parents can significantly improve simply by taking the time to talk about it, leading by example, and helping teens learn from their mistakes.


"Just like swimming, money management is a vital life skill," says Louise Hill, and one best taught young – to ensure that when Generation Alpha and Gen-Z hit adulthood, they don't sink amongst access to fast credit and plenty of temptations."


GoHenry can help with this in a multitude of ways. Firstly, teens get access to in-app Money Missions, which use a series of bite-size quizzes and games to teach them all they need to know about money. The app also helps them track their spending and set saving goals and limits on ATMs and purchases, so they don't get carried away when they are out and about with their debit card for teens.





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Written by Anita Naik Published Oct 10, 2022 ● 4 min. read