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New Mexico State University

New Mexico State University

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Helping Teens Manage Money

LAS CRUCES -- Just when parents are paying off bills for new school clothes and supplies, teenagers may need more money for other necessities like band trips, class rings and yearbook pictures. All these expenses can stress the family's budget, said a New Mexico State University consumer education specialist.

Many social activities like drama clubs that continue throughout the school year require money, said Susan Wright with NMSU's Cooperative Extension Service. It's sometimes difficult for teenagers to understand why parents don't have unlimited resources.

"Parents can help avoid problems by including children in family financial discussions and giving them opportunities to assume responsibility for some of their own expenses," she said. "This will help them move toward financial independence."

Wright offered parents these tips to help teenagers become good financial managers:

* Consider giving teens an allowance. Decide what expenses the allowance should cover and let teens budget to meet those needs. Giving an allowance should not mean the family spends more. It simply shifts the responsibility to teens to manage money that covers legitimate expenses.
* Teach teens how to shop. Talk about comparative shopping, reading labels and interpreting advertisements. Explain the importance of planning ahead to cover necessary purchases. If credit is used, explain the costs of credit and the impact of credit and credit practices on the true cost of items.
* Explain the family's financial situation -- income and outgo. If teens are old enough to spend your money, they should understand where it comes from and how it needs to be used. Discuss how the financial goals of the family affect the amount budgeted for current expenses. Be sure they understand the importance of setting financial goals and planning for the family's future needs.
* Teach teens how to use and manage a checking and savings account. Go over monthly bank statements together to show them how to justify checking accounts. Help teens understand the importance of keeping good records and knowing where money goes. Discuss the importance of the interest rate for a savings account and how regular deposits will grow.

"It's important that parents help their teenagers develop sound financial management practices," Wright said. "The best way to do that is to set a good example. Be open and supportive and resist the temptation to make financial decisions for them. After all, it won't be long until they will be out in the real world making decisions on their own."