Money management for teens: Teaching teens about money

Money management for teens: Teaching teens about money

Parenting teenagers can be challenging. Money issues are often the last item on your list to discuss with them. Yet, as Sam Sims, Chief Executive of National Numeracy, says: "Feeling confident with numbers is a vital life skill, particularly when it comes to managing money. We're faced with decisions about money at work and home every day, from paying household bills to comparing prices in a supermarket or saving for a holiday. If we don’t feel confident with numbers, it's harder to stay in control of our finances." With only 62% of young people reporting having access to some sort of financial education in school, here's how to equip your child with the knowledge and skills to manage their money for life successfully. 


Related: Financial literacy for kids




18 money management tips for teens

  1. Use teen development cornerstones to discuss money issues

  2. Give teens more financial freedom

  3. Let teens know where money comes from and how to earn it

  4. Help teens understand their payslips

  5. Talk about needs versus wants

  6. Lead by example

  7. Help teens understand savings and set goals 

  8. Help your teens understand compound interest

  9. Show teens how to create a budget

  10. Encourage your teens to spend wisely & track spending

  11. Make sure they know how to be a critical consumer

  12. Increase their knowledge of borrowing and interest

  13. Help them understand credit

  14. Talk about building a good credit score

  15. Build your teen’s knowledge of  investing

  16. Make teens aware of fraud and online scams

  17. Explain the concept of giving

  18. Allow teens to make money mistakes 


1. Use teen development cornerstones to discuss money issues 

Adolescence is a period characterised, along with many good traits,  by risk-taking, poor decision-making, and a push for independence. For parents, it can be an anxious time. But you can use these normal teen behaviours to bring home some key messages about financial responsibility.


This means guiding your teens without overdoing it. Teenagers often learn the hard way that being irresponsible with money has consequences. When they run out of money, instead of giving them lectures or handouts from the bank of Mum and Dad, start a conversation around choices and potential solutions. 


Ask what they feel they could have done differently. Brainstorm ideas around how to safeguard themselves from this happening again, such as budgeting, tracking their spending, and recouping some of their losses through earnings.


2. Give teens more financial freedom

Teens need financial freedom. Without it, how will they learn how to manage money? It’s important they grasp the fundamentals of using debit cards, ATMs, and spending on and offline. 


Says Tanith Carey, author of What’s My Teenager Thinking? Practical Child

Psychology for Modern Parents, “As they grow up, giving teens a fixed income at the same time each week to manage by themselves is really helpful to teach 5them the value of money and to understand that it’s not an unlimited resource.”


One of the best ways to do this is to give them regular pocket money. Another is to provide them with a prepaid teen debit card like GoHenry. 


GoHenry gives teens the chance to flex their financial independence while they get peace of mind. Using the parent app, you can make sure they don’t overspend by tracking their spending. You’ll get alerted every time they make a purchase. You can set limits on single purchases and ATM withdrawals, too.


Related: What should a teenager pay for?


3. Let teens know where money comes from and, most importantly, how to earn it

It's also crucial teenagers recognise the value of money and understand it's not an unlimited resource. The best way for them to learn this is by managing their pocket money. Let them find out for themselves what happens when they splash out without thinking. Or spend more than they can afford.


Hand in hand with this comes earning. Our latest Youth Economy Report shows that 71% of young people believe earning their own money is important. And 34% of teens say they have a part-time job of some description. 


If your teens are too young to get a job, brainstorm ways they could earn extra money. Ideas include helping out at home; teens are responsible enough to babysit for younger siblings, look after family pets, and even help with cooking, shopping and cleaning up.


Related: How to make money as a teenager





4. Help teens understand their payslips

For teens with jobs, it may be the first time they’ve seen a payslip. Explain to your teens why it’s important they understand what this document (digital or physical) tells them. And what it shows them about their earnings. 


By helping your teenager understand their payslips, you’ll be arming them with a money management skill that’ll come in handy as an adult. They’ll need a payslip for proof of earnings when applying for a mortgage, renting a property or taking out a loan. Payslips make understanding taxes easier, too. 

5. Talk about needs versus wants 

Another aspect of money management is to discuss needs versus wants using real-world examples such as:


You might think you need new trainers, but if you have three pairs that fit, what you mean is you want trainers. However, if you have grown out of trainers, then you need trainers.


Says Sue Atkins, Family Parenting Expert and author of Parenting Made Easy, “Today’s teens are exposed to the power of advertising all the time, and it has a very strong influence on them, so it’s important to explain how advertising can make them want things that they don’t really need or can’t really afford or may just be completely unsuitable.  Help your children learn the differences between needs, wants, and wishes, as this will prepare them to make good future spending decisions.”


Giving your kids an allowance or offering them opportunities to earn money with extra chores around the house can also be an excellent way to teach them needs versus wants, how to weigh up their purchases, and how to think before they buy something.


Related: Explaining needs vs wants


6. Lead by example

Just like younger kids, teens watch and observe you all the time. Says Simone Gnessen, Financial coach and co-author of Sheconomics, “All kids learn by observation; the wider the gap between your financial intentions and actions, the more confused they will be about how to manage money. This is why being a good role model is not only about what you say about money and savings but also what they see you do and how you behave around money."


This means that if you are telling them to budget, track their money and not overspend, ensure they don't see you doing the opposite.


Tanith Carey, author of What’s My Teenager Thinking? Practical Child

Psychology for Modern Parents agrees: “ It also helps to train our children in good money habits by talking more openly about how we make our own decisions. In a calm, considered way, talk through your money management and any mistakes you may have made along the way. Chat through your shopping choices and how you work out what is and isn’t good value, and show how you compare prices when needed. These kinds of chats will make it clear that none of us can afford everything we want.


Also, be aware of the unconscious messages you send out around money management. Complaining that you didn't save enough money for bills, overspending when you feel stressed or not having enough for unplanned expenses won’t help teens make smart financial choices

7. Help teens understand savings and set goals 

Teens who are encouraged to save are far more likely to continue saving as adults. According to our latest Youth Economy Report, children in the UK saved over £12.7 million. That’s about 10% of their total income. It’s pretty impressive when you consider that, according to a survey from the Money and Pensions Service, many adults have no savings at all. One in 20 ( 5%) have less than £50, and a further 4% have between £50 and £100 set aside. 


To help them learn to save, try to avoid always stepping in to pay for what they want. Encourage them to set up savings goals on the GoHenry app instead. Whether it’s new clothes, concert tickets, or a new phone, they can set a savings goal and work towards it. This way, they’ll learn the rewards of delaying gratification


At the same time, take the time to talk about how not all savings are made equal. Explain how investments and compound interest (earning interest from interest) work. This will help your teen get to grips with the benefits of saving money in different ways.


Related: How to save money as a teen, How much should teenagers have saved?, Saving for your first car

8. Help your teens understand the benefits of compound interest

Thanks to the power of compound interest, and because teens have time on their side, they have more time to see their savings grow and see bigger returns.  


Explain how compounding only works over a long period. Try motivating your teenager by showing them how to use a compound interest calculator. 


9. Show teens how to create a budget

Budgeting is a skill that will set your teens up for a financially healthy future. Teaching your teens how to budget puts them in control of their money, and they’ll be less likely to find themselves in debt later in life. 


Explain a budget is a monthly spending plan based on the money you have coming in (income) and what’s going out (expenses). A plan outlining where your money is going makes it easier to avoid overspending.  


Help your teenager create a weekly or monthly budget using real-life examples. Have them sit alongside you when you next balance yours. Or use a bank statement to show them your monthly outgoings. 


Related: Free budget worksheet for teens


10. Encourage your teens to spend wisely & track spending

Spending wisely can be tricky for teens. There’s peer pressure to deal with, plus so many temptations, which are more accessible thanks to online shopping and social media. What’s more, those ‘must-have’ purchases become more expensive in the teenage years, and giving in to impulse buys can blow a budget in seconds. 


Explain to your teen how tracking their spending will help them spend wisely and stay within their budget. Keeping tabs on what’s gone out and what’s left over will help them make wiser spending choices. The GoHenry app can help them see this in black and white.  

Related: How to stop your teen from impulsive spending

11. Make sure they know how to be a critical consumer

Teaching your teen to become a critical consumer will help them make better decisions about spending money and returning unwanted items bought on impulse. Returning items online or in-store isn’t always straightforward, so it’s better to avoid having to do that in the first place. 


If you’re a critical consumer, you make informed spending decisions. Basically, you think before you buy. It’s not just about stopping yourself from buying stuff you don’t really need. It means searching for discounts and better deals.

Related: Everything teens need to know about returning items




12. Increase their knowledge of borrowing and interest

Understanding borrowing and interest is a key part of your teenager’s financial education. Explain what interest is to teens and how it makes borrowing money from banks or lending institutions more expensive. 


At this stage, they won’t be able to take out a bank loan, but most kids ask to borrow money at some point. Take the opportunity to talk to them about how they found themselves in this situation. 


Is it because they haven’t budgeted properly? Discuss the value of having an emergency fund to cover unexpected expenses. If they borrow money from you or from friends, make sure they pay it back. 


It’s also a good idea to talk to your teenager about credit. With a solid grasp of how credit works, they’ll be less tempted to spend money they don’t have on credit cards when they leave home. And less likely to get into debt as adults. 


Related: How to ask for your money back from friends politely

13. Help teens to understand credit & responsible use

Building credit early can help establish a good credit history for your teenager. It’ll benefit them if they want to apply for a car loan, student loan or when they’re older. While your teen can’t legally have their own credit card account until they’re 18, they’re allowed to be an authorised user on yours. Should teens have access to a credit card?  It’s a lot of responsibility. Before you decide, you should make sure they’re armed with the facts.


Related: Credit card facts for kids and teens, Credit tips for teens


14. Show them the importance of a good credit score

Explain the benefits of good credit scores to your teen and how to build a good credit history. Also, show them how to check their credit reports and explain why it’s important to do it regularly. Not just in case they’ve fallen victim to identity theft but so they can rectify mistakes or take steps to improve their credit rating if it’s slipped.

Related: How to help your teen build credit

15. Build your teen’s knowledge of investing

Along with budgeting and saving, investing is a key money management skill. It’s a tool like no other your teens can use to make their money work for them. 


In the UK, your kids must be 18 to legally buy stocks. But there are still many ways for under-18s to learn to investing. 


Money Missions by GoHenry is a great way to teach children about responsible investing. With bite-size money lessons, youngsters can build their financial literacy and confidence and learn about investing in stocks and shares.


They can also put theory into practice. As a parent or guardian, you can open a Junior Stocks and Shares ISA and supervise their investments until they reach 18. Then, they can take control. 


Capital at risk. The value of your investment can go down as well as up, and past performance is not a guarantee of future results. Tax treatment depends on your individual circumstances and may be subject to change. 


The information provided is not intended to be investment, tax or legal advice – nor does it claim to be comprehensive. Speak to a professional if you’re unsure about whether investing is right for you. We do not endorse any third parties referenced.  


Related: Can you invest in the stock market before you turn 18?

16. Make teens aware of fraud and online scams

Your teens may be tech-savvy, digital natives, but that doesn’t make them immune to fraud and online scams. Social Catfish found people aged 20 and younger had the fastest scam victim growth rate (156%) of all age groups, with financial losses to scammers growing from just over £6.5 million to £58 million over the last three years.


This is why it’s vital to teach your teens how to keep their money safe online. Encourage them to protect themselves from card fraud by checking their account balance regularly, keeping their PIN safe and destroying old cards. 


17. Explain the concept of giving

What lessons about giving and the importance of charity do you want to pass on to your teen? Forcing a teen to give money may be a battle. You’re better off leaving it to them to decide. 


Help them find causes they feel strongly about. Or choose a problem they’re passionate about and help solve it by raising money for the cause. Who knows, you might have the next Greta Thunberg on your hands. 


Related: Teaching your kids to give back

18. Allow teens to make money mistakes

As most successful business owners and entrepreneurs will tell you, we learn from our mistakes, not our successes. 


It’s frustrating when your teen does exactly what you warned them not to do, but it’s important they learn from their mistakes. That way, they won’t make them in the future when they’re earning a salary and paying a mortgage. 


Common teenage financial problems and worries

Just like adults, teenagers worry about money. The London Institute of Banking and Finance surveyed more than 2,000 15–18-year-olds across the UK for its 2021/22 Young Persons Money Index. The survey found that 81% said that they worry about money, and 67% said that they had become more anxious about money since Covid. Our own research has also found that 71% of young people are worried about the cost of living crisis and rising prices of food and electricity. 


Common teenage financial problems also include:


  • Not earning/having as much money as their friends

  • Not being able to buy what they want

  • Spending more than they earn

  • Borrowing from friends or paying for friends  

  • Struggling to meet savings goals

  • Getting out of debt


“Our research shows most young people worry because they don’t have the financial knowledge they need to make better decisions,” says Louise Hill, Co-founder and COO of GoHenry. “Educating them to show them how to resolve their financial worries and problems will help reduce the likelihood that they’ll develop risky financial habits.”


Luckily, there are lots of ways you can help your teen deal with their financial worries. And safeguard them from future financial risk. Developing their financial literacy is key. So is teaching them effective money management skills like budgeting, identifying wants versus needs and learning to delay gratification.


Activities to teach money management to teens

Healthy financial habits take time to develop. Teen money management activities help reinforce what you’re teaching them. The sooner they start putting their money skills into practice, the more time they’ll have to develop them under your guidance. 


Here are some activities to help teenagers build their financial literacy:


  • Read books about personal finance — books such as Cash: How to Earn It, Save It, Spend It, Grow It, Give It and Managing Your Money are aimed at teenagers. 

  • Play games — board games like Monopoly, PayDay, and the Stock Exchange game are fun ways to learn about managing money. There are online games useful for teaching teens money skills too. Second Life is a good one for learning about the economy. Time for Payback takes teenagers through their university years, challenging them not to fall into debt. SPENT is excellent for teaching budgeting.

  • Giving them pocket money through GoHenry enables them to set savings goals, track their spending, and budget and participate in the digital economy. 

  • Encourage them to ask questions about money, credit and even the economy so they can start to build a bigger world picture of personal finance and how it affects them.


Related: Best money and finance books for teens

How to help build your teen's money management skills with GoHenry

Teens learn best by doing. So show them how to manage money for themselves with a GoHenry prepaid teen debit card.  Available for kids aged 6-18, GoHenry is a safe way for teens to practice their financial literacy skills. There’s a companion app for parents which allows you to pay pocket money, monitor spending, top up when necessary and create saving pots. Money Missions is our in-app financial education tool, allowing your teens to explore various financial topics, from budgeting to saving and more. 





Capital at risk. The value of your investment can go down as well as up, and past performance is not a guarantee of future results. Tax treatment depends on your individual circumstances and may be subject to change. 


The information provided is not intended to be investment, tax or legal advice – nor does it claim to be comprehensive. Speak to a professional if you’re unsure about whether investing is right for you. We do not endorse any third parties referenced.
Written by Anita Naik Published Mar 6, 2024 ● 4 min. read