Your Teen and Money 

When Laura Stith’s sons began a paper route, they were required to put some of their earnings into savings. The Mount Lookout resident wanted her sons to avoid the infamous “burning a hole in your pocket” syndrome. Stith tried to teach them that it was OK to save a little and not spend it all at once.  

After a while, Stith gave her sons more control of their money, but they spent it immediately. However, with Stith’s encouragement, they later saved enough to purchase a computer together: one son used his saved earnings, and the other used saved birthday and Christmas money. Little did they know that this was practice for real-life money handling. They had their mom to thank for teaching them this very important lesson 

According to Ashely LeBaron, co-author of a 2018 study by the University of Arizona, parents play an irreplaceable role in their children’s financial education. For most kids, their spending attitudes, knowledge and behaviors about money start with their parents. Parents teach their kids about money when they model skills such as working hard, managing money and spending wisely 

Erin Harris, director of Student Enterprise at University of Cincinnati’s Economic Center, agrees. Ohio does not have mandated financial literacy instruction in schools, so parents must shoulder the responsibility of teaching kids about finances. Harris says that when talking about money, parents should discuss things such as budgeting, how to obtain and use a credit card, and how to protect against identity theft.  

But talking about everyday financial behaviors are just as important, Harris says. Conversations about how much things cost and budgeting for everyday items are critical. Important big-ticket costs, such as college, should also be discussed. 

“Parents should talk to their children about college while they are in middle school,” Harris says. Discussions can include the expense of college, how much the family can contribute and how much the child is expected to help, Harris says.  

So, what skills should parents focus on when teaching their teens about money? Harris believes that parents can model how to live a life that they can afford by budgeting and saving money themselves. Parents should also explain more complicated concepts, such as carrying debt, by explaining compound interest, what it means to carry a credit card balance and how to say no to owing money. By talking about these topics, parents are helping their kids understand and avoid unnecessary debt.  

Parents can also demonstrate how to delay instant buying gratification. Teens should learn to differentiate between needs and wants, and the value between saving and spending. “They have to recognize that the cost of spending money today is the savings that you forgot in the future,” Harris says. Helping your teen realize the value of savings helps to quell the instant gratification of buying now versus saving for later. For graduating teens who are looking to get a job or go to college, this is especially critical. 

The discussions that you have with your teen now will help set them up for a better financial future when they’re adults. With hands-on practice and open communication, you’re preparing them for a good financial start. 

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