How To Teach Teens to Make Good Decisions With Their Money

In today’s consumer-driven society, it’s crucial for teenagers to develop strong financial decision-making skills. High school is a good time to empower teens to make informed and responsible financial choices as they head to college or into their first real jobs.

Most teens reach adulthood without the preparation they need to be successful. By teaching teens about money, they’ll have more confidence, independence, and resilience as they move toward their financial future. In this blog we’ll explore strategies to teach personal finance for teens so they can make good decisions with their money, empowering them to become financially independent young adults.

Emphasize the difference between wants and needs.

From video games to clothes and outings with friends, teen spending habits are often impulsive, more in the moment than related to longer-term goals. While they should leave room for fun, comprehending the difference between wants and needs is essential for teens.

Talk to them about their spending habits and the importance of budgeting for both present desires and future fixed expenses like rent and utilities. While it may be tempting for them to quickly spend a paycheck on fun, it still needs to cover essential expenses. This foresight empowers teens to make informed choices, paving the way for a financially secure future.

Lead by example.

Parents are the ultimate financial role models for their teens. Make a point to demonstrate responsible budgeting and invite your teens into discussions about household finances. When teens see firsthand how money is managed, they’re more likely to internalize these practices.

Challenge them to budget with real expenses.

mom-and-daughter-working-on-homework-and-work-togetherTaking the abstract concept of budgeting and anchoring it to real-life expenses can be a crash course in financial reality for teens. Have your teen do the math to figure out how much of their paycheck would hypothetically go towards a list of fixed expenses like utility bills, car insurance, and phone bills. A hands-on approach allows them to grasp the idea of allocating a portion of their earnings for these necessities.

Consider asking your teen to budget a percentage of their earnings to chip in on the fixed expenses in your household. This will teach them to prioritize, follow a budget and meet their obligations.

Build money management skills.

Teaching money management to teens will benefit them throughout their lives. By empowering them to make good financial decisions, you’ll set them up for success.

Allowances, part-time and summer jobs.

Whether your teen earns money from an allowance or a job, it offers a real-world preview of earning and responsibility. They may even have new expenses that come with a job such as transportation, meals, and work attire.

These are opportunities to teach teens about setting goals, saving money, and covering the necessities. For teens heading back to school, learning how to budget their first paychecks from their summer jobs will ensure they can cover expenses like books or outings with friends. In the process, they cultivate a sense of accomplishment and independence.

Balancing spending and saving.

Guiding teens to strike a balance between spending and saving is crucial. Encourage them to allocate a portion of their earnings from allowances, part-time gigs, or summer jobs to cover fixed expenses while setting aside other portions for wants, emergency funds, and long-term goals. This balanced approach lays a foundation for financial security.

Avoiding impulse buying.

Impulse buying can become a slippery slope, especially for teens getting their first taste of independence. To counter this, encourage teens to pause before making a purchase.

Introduce the 24-hour rule, which encourages potential spenders to wait a day before buying any non-essential item. This simple rule provides time for reflection so they can discern between genuine needs and short-term wants.

Ask them questions like “Will this item still bring joy a month from now?” and “Is there a better use for this money?” These strategies help your teens make smarter decisions and avoid impulse buying.

Delayed gratification and long-term planning.

The ability to forgo immediate desires in exchange for more substantial rewards down the road is a cornerstone of responsible money management.

Teach the power of patience by illustrating scenarios where saving today can lead to greater opportunities tomorrow. Whether it’s s

etting aside money for a dream vacation, a college fund, or their own business venture, delayed gratification transforms their financial decisions into stepping stones toward success.

Handling unexpected expenses.


Life is full of surprises, and teaching teens about money for an emergency fund is an important part of their financial education. An emergency fund acts as a financial safety net, providing a cushion for unforeseen expenses.

Your teen can set aside a small percentage of their earnings for their emergency fund. Additionally, you can introduce the concept of insurance and how it further shields individuals from financial headaches caused by unforeseen events. By preparing for the unexpected, teens learn to approach financial challenges with resilience and foresight.

Learning from mistakes.

Financial missteps are a natural part of the learning process. Reassure your teens that making mistakes is okay, as long as they learn from them. Talk with them about taking an adaptive approach to financial decision-making instead of a purely reactionary one. This mindset will prove invaluable as they navigate the complexities of the financial world.

Real-life success stories and cautionary tales.

Reinforce the importance of financial literacy by sharing real-life stories of young adults who were well-prepared for financial responsibilities. Even more valuable may be a cautionary tale of someone who was unprepared for a job loss or medical expense. You might even have a story from your own financial past that can inspire your teen to follow your lead—or make better choices.

Introducing teens to banking products.

Opening a bank account is a big step towards financial responsibility. Discuss the basics of checking and savings accounts with your teen, and how using different accounts can make budgeting easier. Look into teen or student accounts with lower fees and minimum balance requirements, and determine if your teen is at the right age for a debit card. The OnPoint Savers account is just for kids 17 and under, and could be a perfect way to get them started.

Be ready to prepare your teens for a bright future.

Teaching teens money management skills and financial literacy is an investment that pays invaluable dividends. By showing your teens how to make informed decisions, pause before purchases, and learn from mistakes, you’re preparing them for a secure and successful future. For more on this topic, check out our post on Raising Smart Spenders and Savers.

Interested in opening an OnPoint Savers account for your teen? Learn more here, then give us a call or stop by your nearest branch.


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