One thing I know about teenagers is that they always want money, but most of them don’t know what to do with it. They usually end up blowing it and then looking for ways to get more. I know this first hand as I have two teenage boys and a preteen girl living in my house. So, this year we started talking about money management for teens.
I want to be clear to say that I am not an expert on money management or a financial advisor. All that you will read here is from personal experience from a mom of teens and from my teens themselves. I felt it would be important for them to share some personal insights and tips they have learned as well.
Financial Goals for Teenagers
The patterns that your teen sets now will serve them for the rest of their lives. So, it is so important to set them up for achievement.
Learn what the Bible says about money management:
First, as followers of Christ, the Bible informs all that we do. So, our first goal should be for them to understand the principles that God sets out for His children when it comes to dealing with money.
I hope one thing that we can help our youth to see is that when we follow God’s commands for our money, the benefits and promises always out weight the sacrifice. We have promises of being filled, overflowing, and prospering when we do things God’s way.
#1-Honor God with Your Money
We should tithe to our local church. We should also use our money in ways that honors God and not spend frivolously or store up material possessions.
Honor the Lord with your possessions,
And with the firstfruits of all your increase;
So your barns will be filled with plenty,
And your vats will overflow with new wine.
Proverbs 3:9-10 NKJV
There is one who scatters, yet increases more;
And there is one who withholds more than is right,
But it leads to poverty.
The generous soul will be made rich,
And he who waters will also be watered himself.
Proverbs 11:24-25 NKJV
#3-Invest & Save Wisely
We do not know what the next day brings, but we can wisely prepare for it. This is a balancing act because while the Bible calls us to live generous, it does not call us to give everything away so we don’t have enough to provide for our own needs.
Be diligent to know the state of your flocks,
And attend to your herds;
For riches are not forever,
Nor does a crown endure to all generations.
Proverbs 27:23-24 NKJV
#4-Debt is Bondage
There are no shortage of scriptures that warn against debt. It is a sort of bondage that is hard to break. In a society that pushes debt with credit cards, loans, and excessive spending, let’s show our teens how God’s way is better.
Do not be one of those who shakes hands in a pledge,
One of those who is surety for debts;
If you have nothing with which to pay,
Why should he take away your bed from under you?
Proverbs 22:26-27 NKJV
Prepare for the Future
We are raising up the men and women of tomorrow. We need to be sure that our children are prepared for future success with money goals. Here are a few things you can do now to help them for tomorrow:
- Share personal struggles or successes with your money from the past so they understand.
- Show your teen how you budget your resources.
- Make sure they take a personal finance class at school or provide them some resources (list at the end).
- Set up an appointment with a financial advisor at your bank and let them ask questions about money management. Open a savings account.
- If your teen has a job, open a checking account. Set limits and help them start to manage with accountability.
What Should a Teenager do with Their Money?
So if you are a teen or parent of a teen, what should they be doing with their money? How can you help without taking control? And, how can we be sure what they are doing honors God and sets them up for the future?
What do you need to buy as a teen
One of the things we can do to really help our teens is to define clearly needs vs. wants. For example, they will think they “need” the latest phone or brand name hoodie, but this is a want. We can see a need for a phone for safety and communication, but there is no real need to upgrade constantly or have one out of their price range. This sets a bad trend.
While its’ fine for them (and normal) to spend some money on “fun” stuff like video games or a movie out with a friend, they still need to balance that with obligation. This is where parental teaching is so important. They need some responsibility.
For example, my son works so he pays for his own gas to take the car out and for his own cell phone bill. In addition, we have taught him to tithe 10% to the church and set aside savings each month for the car he hopes to buy some day (For him, this is about 40% of his monthly earnings.).
Anything he “wants” outside of what we supply him, he is welcome to buy himself, however, we continually remind him of keeping to his budget and wants vs. needs.
How can a teen set a budget
In the budget, your teen should consider setting aside money to save, spend, and give. First, have them start with how much they have whether it’s from a job, allowance, or just gifted income. Next, have them list all expenses they expect for the month and subtract. Last, encourage them to put the rest in savings or make a plan to cut back on spending.
Most experts suggest tracking your money for a month or two the see where you are spending. The majority of people will be surprised how easily you can categorize spending and find simple ways to cut back. Most banks have a free tool that you can access online to do this with your spending. There are also a couple of free apps to help: EveryDollar , Wally , Rocket Money
How to start saving money as a teen
Help your teen make a decision about how much money to set aside for savings-20% is a good start. Next, decide whether they will put that cash aside somewhere or if you would like to help them open a savings account.
You can take your teen to open a high-interest savings accounts for funding short-term financial goals ( a new car or trip). While the interest they earn on small account balances might not be significant, it teaches them that money can add up over time and it’s better to make than lose.
Once teens have accumulated some savings, they have the experience of setting aside money they won’t touch. This is a good opportunity to help them learn about investments. The longer their money is invested, the more it adds up.
Personal Finance Resources for Teenagers
There is also a Foundations in Personal Finance course designed for homeschool but is great for any teen.
Here are some other books and resources to consider:
Money Matters for Teens by Larry Burkett
Managing God’s Money by Randy Alcorn