7 Financial Experts Share Their Top Money Lessons for Young Teens

7 Financial Experts Share Their Top Money Lessons for Young Teens

You're the parent of a teenager! 


This is a time of change. Physical, mental, social, emotional change. Their hormones are raging, voices are changing, and social schedules are filling up. As they start going out with friends more, they’ll need more money and are likely starting to ask about ways to earn more, or borrow money from you. 


Competing with busy schedules, social calendars, TikTok, YouTube, and video games, can make it difficult to capture their attention. Here are some tips from seven financial experts on ways to engage your kids on the topic of money.

Desire is a powerful financial motivator

For better, or worse, being a teenager comes with trying to fit in. Sure, that pair of shoes your teen wants may look a bit silly, and that shirt they are begging you for is definitely not worth the price tag. But instead of telling your teen something is "ridiculous" or that you "can't afford it," author of "Mom's Got Money," Catherine Alford says, you shouldn't dismiss their desires. "Kids who are 12 to 14 years old will often want what their friends have, like name brand clothes, a certain type of shore, or a video game console," she says.


Instead of making up excuses for why you won't buy your teen something, Alford advises parents to "tell them they can have it if they earn the money for it." She believes this strategy is effective because desire is, indeed, a powerful financial motivator." "Put the purchasing power in their hands," she explains, "and they'll always know how to get what they want instead of asking you for it."

Share your money mistakes

"So many parents feel like they aren't qualified to teach their kids about money," says Rachel Murphy, financial coach, mother of five, and author of "I Am Not Your ATM: A Practical Plan for Teaching Your Teen to Manage Money."


To try and overcome this feeling, Murphy encourages parents to make talking about money normal. "If you messed up with money in the past, don't hide it," she says, adding that parents should use their money mistakes as a way to help their young teens make better financial decisions.


She recommends replacing lectures about money with stories and observations. "The more knowledge and understanding teens have about the good and the bad, the better foundation they will have to start their adult lives."

Model good financial behavior

While you don't need to have all of the answers to your kid's financial questions, Brian Haney, financial advisor and father to a 13-year old, says it is important to "model good fiscal behavior yourself." Even if it doesn't seem like your teen is paying attention to you, they are!


"Parents model everything but often fail to recognize that how we demonstrate emotions relating to money, as well as our tangible money habits can have a significant impact on our kids."


As an example, Haney explains, "if money is always seen as 'too tight,' you can never squeeze out enough to enjoy life or take vacations, and there's not really a healthy balance to spending, then kids can develop a fear of [money.]" And this fear can follow children into adulthood where they can demonstrate the same aversive money habits, Haney adds.


"The opposite dynamic can also play out if parents are overly generous and buy their kids everything," he continues. "This can give the false impression that money is never an issue, and you can always get whatever you want without having to earn it or wait."


It's best to find some middle ground, Haney advises. Demonstrate that you have to work to earn your money but also don't forget to have some fun with it.

Create a kid 401(k)

Doug Normand, who describes himself as "a financially independent parent," says he was able to reach financial independence when his daughter was just 7 years old. Today, his daughter carries on the family tradition, reaching the same status in her late twenties. She's also raising a toddler, applying the same financial tactics that her father used with her.


"On our daughter's 8th birthday, we gave her a raise in her allowance, as well as started 'mandatory contributions' to her 'Kid 401(k),' says Normand. We parents designed it to grow to $5,000 by her 16th birthday through her contributions, parental matching, and a bull stock market. "When it matured she could cash it in to buy her first car," he explained.


Normand believes that having his daughter invest in his Kid 401(k) eliminated the 'car gimmies.' "Instead of fantasizing (and trash-talking) with the other kids about the cars their parents were going to buy for their 16th birthdays, she'd tell them she'd have her Kid 401(k) and would buy whatever car she wanted."

Teach the true value of money

Nate Tsang, CEO of WallStreetZen, believes it's important to show young teens how the value of money extends way beyond just buying "things." Sure, it's nice to have new clothes and the most up-to-date tech, but financial security allows you to do more important things with your money. To teach this lesson, Tsang says parents can "add a donation mandate to their [teen's] allowance."


By advising your teen to give a certain portion of their allowance over to a charity of their choice, it can help them to realize that money "has benefits beyond the financial."

Become a money mentor

Amanda Grossman is a Certified Financial Education Instructor (CFEI) and financial blogger. She advises parents of young teens to change their role from money manager to money mentor.


"When your kids were young, they needed you to manage most aspects of their lives, including their finances. As they age, they need you to step into more of a mentor role as they make their own decisions, and then see the consequences — both good and bad."


Grossman believes that by setting boundaries and giving your teens more financial control, "this will allow them to self-discover some of those critical money lessons that they'll need as a young adult." She says that by relinquishing some financial control, you'll also be able to stop shouldering all of the financial responsibility.


When it comes to young teens, she believes, it's a parent's job to "be there to listen to them, answer any questions they have, and gently give guiding questions to help steer the process."

Test their temptation

Instead of trying to teach your kids theoretical money concepts, get them to focus on their feelings, advises Lauren Greutman, mother and author of "The Recovering Spender." She suggests teaching young teens about impulse control through good old life lessons.


"Bring your kids into scenarios where they will be tempted to spend," Greutman suggests. For example, she recalls taking her kids to see their favorite YouTubers. "I gave them a talk before the show and told them that there would be merchandise, they would want it and feel sad that they wouldn't be getting any. But I wanted them to pay attention to their feelings during the show, and then the next morning."


She explains that this helped her kids recognize the feelings behind why they spend money. "The next day they totally forgot about the merchandise and didn't even really want it."

It's all about responsibility

As kids get older they crave more control over their lives and you may find yourself transitioning from financial manager to money coach and mentor. Help guide your teen to make their own money decisions, while also letting them make mistakes and process the feelings that accompany their choices.


Written by GoHenry Published Feb 24, 2022 ● 2 min. read