9 Ways to Teach Teenagers About Money

While learning budgeting skills is not likely to be a high priority for most teenagers, teaching money management skills is as essential to raising kids as reminding them to brush their teeth and eat their vegetables. If the financial crisis taught us anything, it should be that everyone needs to be smarter about money.

While some school systems have added financial literacy to their curricula, many have not, and in the end, responsibility for ensuring your offspring are ready for adult financial life is on your shoulders. Fortunately, there are plenty of ways you can add to your teens' practical knowledge.

Start with a game. Websites like PracticalMoneySkills.com and Learn4Good.com have free games that teach teens about money management. For example, on the Learn4Good site, teens can play "Record Shop Tycoon" or "Burger Restaurant" to learn about running a business. The Practical Money Skills site has "Financial Football" geared to teens who must answer questions about money to move on the football field and "Road Trip to Savings" to teach them about why they need to save.

Put them on a monthly budget. If you haven't already started your kids on an allowance, you should consider the benefit of a monthly infusion of cash into your teen's pocket. Instead of handing out $20 bills when they're heading out with their friends, you can teach them to control their spending by limiting them to a specific amount each month. You'll need to be ready to say no when they ask for more money after they spend all of the allowance in the first week, but that's the only way for them to learn.

Pay them for choosing to save. Train your kids to pay themselves first by putting at least 10 percent of any gift money or anything they earn into a savings account. You can even offer to match the savings as an incentive for them to save more. Your teens will learn more if they do the research themselves to find the account with the lowest fees and highest interest rate. Teens who already have jobs may be ready for a checking account with a debit card. If so, warn them about the risk of racking up fees if they opt for an overdraft protection program, and consider arranging an automatic transfer from a savings account to cover overdrafts instead.

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Give them a clothing allowance. Instead of paying out-of-pocket for each pair of jeans, have your son or daughter come up with a list of needs for each quarter or season. Figure out a practical budget and then put that money on a prepaid debit card. This gives them the power to choose between blowing their budget on a pair of sneakers or spending more carefully and having enough for an extra pair of jeans and a couple of shirts, too.

Teach them the art of thrift. Teach your kids to appreciate "vintage" clothing for style and savings. Thrift stores and flea markets can be a great resource for gifts, books, and DVDs. Your teens can get a lot more out of their limited spending power if they learn frugal shopping techniques.

Give them a budgeting project. Whether you need a new cellphone plan or are planning a vacation, ask your teen to do the research. A teenager may be better than you are at wading through the various mobile phone options, and will have a vested interest in boosting the availability of data for her iPad or smartphone. A teen can also help look for deals for a family vacation for hotel rooms, flights, or car rental and develop a spending plan based on your budget and destination.

Encourage them to get a job. Nothing teaches money skills faster than getting a paycheck with all the taxes . Before that first paycheck arrives, make a plan with your son or daughter for saving part of every check. Depending on your teen's level of maturity, determine whether the rest of the income will go toward a specific financial need such as car insurance or whether your teen will have full control over the money.

Talk about college financing. According to recent research by FICO, the average amount of student loan debt was more than $27,253 in 2012. Talk to your high school student about their options for college and what your expectations are for their financial contributions during their college years. Giving your teens information about the cost of college and about the burden of student loan debt can help them make decisions about working during college and where to attend.

Warn them about identity theft. A 2012 study by AllClear ID, an identity-theft protection company, showed that minors are 35 times more likely than adults to have their identity stolen. Warn your teen about the importance of safeguarding their Social Security number, name, and bank account information.

Teaching your teen about money matters can not only help them in the future, but it may help your own money management, too.

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