How Did You Teach Your Teen About Money

i don't have an older child. but it sounds like you already have her on a path to financial success.
one thing my parents did for me that was invaluable was to get me a credit card in my name. i could only use the card for gas. dad would pay off the card monthly as long as i gave him my gas receipts AND had good grades in school. (this built my credit and so when i was ready for a car payment or any other loan i had a decent credit score)
i borrowed moms car for work for one whole summer then told my parents that i had x amount for a car. they doubled that amount and helped me find a decent car.

What made the biggest impression on my kids was revealing the bills to them. Instead of just paying the phone bill, I opened it with them and made them tell me how much the basic cell phone line cost, how much data for a smartphone cost, etc. Instead of just paying the electric bill, I showed them the bill. Same with the water, the trash, the mortgage, cable tv, car insurance -all the things that directly involved them since they lived at the house and used the water and electricity, etc.

When they saw the amounts, it dawned on them. And when it was time to get them car insurance, I made sure my phone was on speaker mode and my teen was sitting right there and participating. They heard the questions that were asked (had they taken drivers ed, were their grades excellent, etc), and then together we heard the choices for insurance limits, deductibles, etc. I made sure that they understood deductibles, and other insurance terms, and that they knew who their insurer was, and how to contact them in case of emergency or accident. I was shocked at how many of my son's friends didn't even know the name of their car insurance company.

I think many parents tell their kids "this stuff costs a lot of money" but until the kids see it in black and white, they don't have a reference point. And although they'll be paying for things differently than we used to, sometimes, they still may need to write a check for a deposit on an apartment, or at a business that doesn't have Apple pay or an electronic pay method. I think they need to learn the basics of check-writing and check receiving and account balancing.

We paid for basics, but made my son pay for gas and registration. As long as insurance was kept to a minimum due to no accidents or violations, we paid for that at first. We paid the basic phone plan, but if they wanted smartphones, they had to pay the extra cost involved with that (data plan). And we pretty much monitored how his behavior about money was going during those first few years of semi-independence. Was he losing things quickly (How did that new phone case that was so pricey "disappeared" after a week? Did he not know where the expensive calculator was before the first semester was over? Did he run out of gas? Did he take care of the car?) Since he proved to be responsible and trustworthy, we were a little more lenient. But if he had been irresponsible, we would have been much more strict.

So, I guess my basic answer about what is most important is: Knowledge. Being involved in the money paying process. Information.

Ya know as the mother of two responsible adults, I haven't a clue. Pretty amazing that some are sure of what did it. I am sure my mom would say it was something wonderful she did but in reality my brother and I hated her and were going to be independent of her as quickly as possible.

I hope that isn't the case with my kids. :)

They worked since they were 13 and didn't use school and sports as an excuse. I suppose that must be part of it, excuses didn't fly in my house. You want me to believe you can't do something prove it by trying. Nah, that can't be it because who proves anything by saving. Who knows.

My kids are required to save up to buy a car if they want to drive, they do not get to use my car. I earned that, I use that. They all did, are trying, so far my dad has gone and bought them one so they use part of the money to pay the taxes and title on their car. They pay for their gas and insurance. I pay for their needs they pay for their wants.

My older daughter had over 15k saved for a house before she graduated high school. I can't really say that had anything to do with anything I did because her older brother had lint to show for himself at that point, no debt mind you but no savings either. They are now 25 and 27, still no debt, crazy girl wanted to pay cash for her house. She is now considering a small mortgage she can pay off in a couple years.

I mean that sounds like the kind of kid you hope to raise, sorry I can't tell you how. I know making your kids miserable works pretty well, both my brother and I have done well for ourselves. :)

I repeat the mantra..."don't spend money you don't have" and "always live below your means"

My girls used to think $50 was a lot of money until they saw what they could buy with it. They learned this lesson when they were 7 or 8 yo though.

I also buy every HS graduate I know the book...http://www.amazon.com/The-Wealthy-Barber-Updated-Edition/...

I don't know exactly how I'll feel when the time comes but I truly think a student already has a full time job, that is going to school, doing their school work to the best of their ability, make the best grades they can with the goal being to go to college and get as many scholarships from their grades and activities as they can.

So I do NOT plan on the kids working in high school unless they really really want to.

My preferences are, after their education, that they work hard in their sports, drama, dance, cheer, and clubs if those activities might help them get into college.

So many people don't make church a priority anymore and so many kids never attend the youth meetings on Wednesday evening and they don't do much of anything other than school, homework, and a job. I find that so sad. I have so many fond memories from my youth years and am friends with many people from that era of my life still today.

That's not what I want for the kids. I want them to have a life after their school day and to, not waste time, but to have time to enjoy life and be well rounded and able to handle a lot of variety.

I suggest teaching her about a budget. Start there and all of the other topics will follow. Use a zero-balance budget in the style of Dave Ramsey...there are a ton of free tools on his website. Give every dollar a job: tithe, retirement savings, fluid savings, bills, a specific amount of money for spending, special savings for semiannual bills like car insurance, and so forth. Teach her about cash spending instead of using debit cards (we spend less when we have our allowance in-hand). About tracking inflow and outgo. About how the percentage of credit used impacts her score (more than 10% used makes the score go down, so if she has a card with a $500 limit and spends more than $50, her score will drop).

So...budget first, and then talk about the rest as you go. That's what I'd do.

Hmm, my advice is going to contradict Tadpoles :) YMMV

I would say get her a debit card, but not a credit card. I know many teens who racked up tons of credit card debt (I'm an advisor to a college club so these are older teens/early 20s). Then the bill comes and the parent has to pay it because what other option is there? I think prevention is easier than trying to get a teen to repay you after. With a debit card, if she doesn't budget and runs through her funds, she's done until the next paycheck (or allowance payment, or whatever).

For the existing account, I would take the $ for the car and put it in a separate account for her that she doesn't know about. Then, when she's buying her first house, or needs a deposit on her first apartment, or something like that, you can give it back to her. My child is still young (only 9), but that is what we do already. He saves the $ for an iPod, we get the iPod, and put the $ he saved into a bank account - in his mind, he paid for it and he is more careful with it and he's learning the value of money - it took over a year of saving all his birthday and Christmas $ to buy that iPod.

IMO opinion there are three basic things she needs to learn:

1. Money is finite
2. Money comes from work (sounds like her schedule may not allow for a job during the school year)
3. How to manage money (make a budget, stick to it and balance a checkbook)

This is the perfect time to have her start managing not just the money she earns but the money you spend on her. IE instead of paying for this activity, that activity, those clothes, the prom expenses, year book etc. You transfer to her account the amount of money you would spend on her and give her that month. She makes a budget in advance and she manages the money and if she screws up you do NOT rescue her instead she learns a valuable lessons at 16 instead of 26.

Way to go for thinking of this now! So many parents did not teach this to their kids (including my own parents).

I really recommend smart money smart kids by Rachel Cruz and her Dad Dave Ramsey.

I think a lot of it depends on how money management is dealt with in the home. A child picks up on it if parents are financially responsible and learns those habits such as delayed gratification, saving, etc. We have drilled personal responsibility in her head from day 1.

Our daughter will be 21 in Dec. She was raised among us working from home from our kitchen table running our company. She is aware of the financial decisions we make for home and company. We just signed a very nice contract that opens up our business to a whole new world along with what we currently do.
She knows that I am in year #15 of substitute teaching because I love the children.

We've taught her about multiple income streams. Example... if everything were to crash and burn right now, I automatically have a full time job with the school system. Due to the recent contract we just finalized... our company could easily sway in a separate direction which in turn would automatically include income.

She is aware of the sacrifices we have made to fund her college and our retirement.

We have never asked her to work (outside our company where she is an employee with the 401K plan) because her studies have been her priority. She has maintained a 4.0 in college... now a Junior and I know what type of drive and commitment she has to continue her 4.0 streak. She is aiming at a great MBA school and is determined to get in with her good scores as well as her other positive attributes. She does babysit about once a week and gets $100 cash.

She lives in a condo we purchased and she is responsible for her food, gas, entertainment, clothes.

She has a credit card but she uses her debit card. Any school related expenses are for the credit card and reimbursed.

She is fully aware that a credit card is not what you use for money... it is debt and debt is evil. Any credit card used around here is paid in full at the time it is due or before. We do use the card heavily for company expenses but it is always paid ahead of time.

Bottom line, I believe however the parents model financial responsibility, the children will pick up on it. It is our job to help them grow into financially responsible adults.

I feel you on feeling out of date. Daughter pays for food and such with her phone.

My kids don't use checks. I suggested it, but it's too old-fashioned for them. So far I have not been able to get them to use a check register, as I do, but that's probably old-fashioned too. And they probably don't have enough bills yet to warrant it.

What worked for me is that I didn't give them an allowance, and they got jobs. When they earn their own money and have skin in the game, they realize the value of money. It was pretty easy that way. As young adults, they are all very responsible with money. They have to be, because they are earning it, and it's not coming from me.

I see no reason that she can't contribute to the car.

I understand your concerns, and I commend you for addressing this at a relatively young age. I think it's great that she has had to save for some things and also give to charity. We had a banking system for our son when he was young with a divided bank (spending, short term savings, long term savings, and charity).

My suggestion is that you take your daughter to the bank to open a student checking account. They will not charge interest on this regardless of daily balance or number of transactions - it's a way to get teens into the banking habit. She should learn how to reconcile a bank statement, although nowadays most people don't bother doing it because a) the banks are accurate and b) you can check statements on line and see the running balance. But she should understand the principle and method of doing it.

You can put money into her account and see every transaction (important!) but she can't see your bank accounts.

I think she should pay for some of her car - based on principle. The kids don't always understand that the money comes from Mom and Dad and that the unending supply isn't guaranteed. Then you can arrange some sort of cost-sharing for insurance and gas, as well as registration and sales tax and so on. She may as well learn the processes involved.

There is a budgeting program available from Mint.com which allows you to do everything from get alerts for bills due to putting together a budget or a priority list. My son started using it in his early 20s and it's really helped him organize things. I'm transitioning into that myself so I can get away from the lists on the refrigerator for stuff that needs doing (repairs budgeted, etc.). IT also organizes her expenses by categories, so she can see that she's spending $200 a month on designer coffee and movie tickets vs. paying her car insurance! So look into that.

Even if you are funneling some money to her, she needs to see it every single time and on a bank statement or balance sheet.

Kids rarely use checks but they should have some on hand and know how to write them. Using a debit card is fine - no credit cards at all for this age! - but they need to see not just a list of transactions but a categorization of expenses and income.

One of the best money lessons I learned from my dad was about borrowing money and paying interest. I was a little younger than your daughter when I wanted to buy a "boombox" that was over $100. My dad loaned me the money to pay cash for it. Then he charged me interest on the loan. (I think it was 15%.) Every month he expected a payment. He should me how much more I was paying for the purchase because I had taken out the loan. It was a safe place for learning about loans and interest.

Another lesson that I got was from my 8th grade math teacher. We spent an entire quarter on a personal budget unit. The thing I remember most was him telling us that you never put something on a credit card that you won't still have when the bill comes--specifically eating out. I lived by that rule pretty much through college with some exceptions. I still feel a little guilty when I use my credit card at a restaurant.

I have a 13 year old with about $600 in the bank that he has been squirreling away for years. My 10 year old has just under $400.
Any money that they receive (outside of birthdays) I make them put half in the bank, not to be touched, and the other half they can do as they please. My eldest usually saves, my younger one usually spends. :)
I would NEVER EVER EVER give my child a credit card. Heck to the no.
My boy plays premier soccer and is in jr high so I understand how busy they can be! Soccer practice 4 nights a week and 2-4 games on the weekend does not leave a lot of extra time, right? Our coach has told the boys that they need to start reffing games once they hit 13. They are old enough to be linesmen on younger kids games and they earn about $28 a game. So, if they line 4 games in a weekend they are making some money! Plus, then they are not working during the week so they can still dedicate time to their sport and their school work. Just something to think about.
As far as checks and buying cars.....there are so many studies that prove that a kid that actually BUYS their own car (ipod, insurance, whatever) will take better care of that thing! Why? Because it's THEIR money, not anyone elses. I have made it clear to my kids that they will be assisting in purchasing their cars and they are 100% responsible for their portion of the insurance. And if they want to go out, that's on them.
Guess they better start reffing! lol
See, I want them to be independent when they are adults. I don't want them asking me for money.
I laughed about the checks. I haven't even written a check since 2009! But I DO think balancing a checkbook is important. It makes your child understand money coming in and money going out.
If your child doesn't have a savings account yet I would certainly get her one of those. My boys both have one in their name, but with me as the parent. Meaning I have to sign if they deposit money or withdraw.
Good luck!
L.

We started teaching our kids about handling money right after they learned how to count it. When they were little, but old enough to read, we taught them how to grocery shop. Compare prices, read tags to calculate price-per-until, subtract coupons, etc. When they were older, we had jars at home for short & long term saving/spending and such. They've planned and paid for their own purchases, such as handheld gaming or other wants.

They know about budgeting. They know the basics about how credit cards, mortgages, and other loans work. Tweens tend to hear that a parent makes $x-amount and think it is a lot, so it's not a bad idea to share the rent/mortgage and utility bills for perspective.

Now that the oldest has started high school, he will have a checking account to manage rather than just cash. Debit card AND checks. Some people don't ever need to use checks, but I use them for both personal and business matters, so everyone should know how to write them and be in the habit of recording transactions. (Checking your bank record online or calling to check a balance is not sufficient, unless your account is largely dormant.)

Our school district requires a personal finance course for graduation, but they don't reach that class until Jr/Sr year. It's never too late though! I volunteer teaching financial literacy to adults. Many adults never learned from their parents because they didn't think to do it, or their own parents didn't have the skills themselves.

If her intent for saving was for a car but the money isn't needed to buy a car, then you could have her use that $700 to contribute towards insurance and pay for her own gasoline.

Added: One thing to NOT teach kids is to use credit cards for 'emergencies'. Many adults do that and it's a downward spiral. Minors can use debit cards, but should not be given a 'just in case' credit card.

My son is 15 also and has saved a little over $1000 for his car. We intend to match whatever he has saved to allow him to get something decent. I'm guessing he'll save another $2000 once he has his job.
You are doing a great job already but I'd like to suggest Dave Ramsey's Financial Peace. We started that in 2010 and our sons have grown up living that way. I have no doubt they will carry it on, it's all they know.
We are going to get him a checking account this summer. At the first of every month, he will have his "allowance" for the month deposited. That includes, clothing, school lunch and other specifics. Anything else, he has to earn. If he overspends, better to learn now than later. When I went to college, my Dad told me he would pay my tuition and food in the campus cafeteria. All else, books, gas, fun, insurance for the car was my responsibility. BEST LESSON EVER!
You are doing GREAT Mama!! Keep it up!

Teach her to withdraw a weekly "allowance" for herself in cash. And to spend only that. When it's gone, it's gone.
If she does what most do, she'll almost immediately start swiping that debit card everywhere... and not keep good control over what she is spending. AND it increases the risk of fraud and stolen information from her card. If she uses it for gas, they may even place a hold on her funds for more than the amount of gas she bought, causing her to become overdrawn for some other insignificant charge.
Teach her all these "issues" because nobody else will, and they are not automatic that they will know them. Heck, there are "adults" out there who don't realize some of the risks they take swiping a debit card in some places.

Spend in cash. Withdraw from safe (and free) ATMs only. Or make a small purchase in a safe store (grocery store for example, a pack of gum maybe) to get cash back without being charged a service fee by the bank.

I would have her contribute some set sum towards her auto insurance. It's a good incentive to obey the rules of the road, not speed, etc, or she won't just have points on her license, but more expensive car insurance. Which doesn't sound like a big deal to a teen who has NO IDEA what such things cost. Nor what it means to say, "getting a ticket makes your insurance go up." They are simply words to them with no tangible meaning... unless you give it one. Have her contribute. And ask your agent what the rate *would* be if she had a ticket on her license, so you can forewarn her what the price increase would be.

As for gas, we still pay for a lot of the gas for our son. He works every day (work study program, so he leaves school after 3rd block and goes to work). He doesn't make that much ($100 take home per week?). He drives his younger sister to school daily (along with himself) and picks her up from after school activities 3 days per week. They go to school, he leaves school and goes to work, then on his way home stops back by the school and picks sister up (it's on his way home) and comes home. So we provide funds to pay for gas that covers getting to/from school 5 days per week. The rest is on him.
I do this by buying prepaid gas cards. We figured out his average mpg, and a $50 gas card covers his back/forth to school for 2 weeks. So that's what I give him. One card every 2 weeks. Any other driving (unless he's running errands for us, which he does from time to time) is pretty much on him, or if he gets friends to chip in when they are running around together.

I have a 16 year old who is about to get his first job (fingers crossed)! He has been getting allowance, but of course, he wants to make more money by himself. He mentioned that he wants to be in charge of his money and I certainly want to encourage that, but I would definitely give him advice on how to try to save money week to week or month to month. I think once he understands how hard he has to work to make enough to go out eat or shop, he will not rush to spend his money :) He will be driving in January, in just a few months and we told him that he can drive one of our cars while he is saving for a car of his own. But he can only drive if he pays for gas and to contributes to the cost of insurance. I know a lot of families do that and it is not unreasonable at all. Hope this helps!

My oldest is only 8, but this is something g I've thought a lot about so hope you don't mind me responding too:)
I learned about money because I grew up without much of it and learned my parents' attitudes toward money, which it sounds like you're doing too. For example, my parents would say things like "we can't get this right now because we need to pay for x" or "we can save up for that" or "when we're done paying off the loan for x we can think about buying y" or "we can't afford x but we can get y". They also taught me about loans, credit cards, interest rates, taxes, insurance, retirement, etc. so, while I couldn't manage a home budget in high school I did at least appreciate that money doesn't grow on trees and the kind of decision making that goes into purchases and understanding your base salary.
The second, and more influential thing was working. I babysat and stuff when I was younger and then got a real job at 16. Then I thought about things in terms of my hourly wage- like is this really worth working 2 hours for? Money really had meaning then. So, basically I think your kid is on track to really understand money through your conversations and then working.
The reason I think about this is I now have a comfortable life style. I'm reLly happy with where I am financially, I think because I have been 'on the way up' so to speak my whole life. I have friends who grew up with money and I feel like these people spend a lot of their life disappointed because they were accustomed to a certain life style that they could no longer afford once they became independent. I see kids in nice areas that clearly have no idea of the value of money and I think they're in for a rude awakening (or maybe their parents who will support them forever!) On the one hand, I want my kids to have it all and all the advantages in life, but I think we have to somehow manage expectations...
As for budgeting, I rarely use checks or balance an account. I don't think those skills are super important, personally, I think just knowing how much money you're putting in vs out and where it's going. I say no credit card because even responsible kids can get in over their heads. She should just work with the money she already has on hand- which is really what everyone should do always.
As far as an allowance, I think it depends. If you want her to have a car so that you don't have to drive her to school and games, etc, then that's really about your convenience and if you can afford it then why not pay the car expenses? Of course if she's doing a lot of extra trips then she should pay for gas at least. Same with the phone, if you want her to have it to call you then pay for it, but if she wants something fancy have her pay the difference. Either way let her know how much it is so she knows. For the job, again it depends. If she's otherwise active or doesn't have a lot of free time because she has tons of homework, then I would think you would want her to continue focusing on those things. Making her pay for too much means she has to work more and that time comes from something else she could be doing (of course, if that would be going to the mall, then By all means make her work!) I learned a ton of skills, besides managing money, by working, but if I had to work full time during the school year I would have failed at school!