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Teenagers as Money Managers

My husband says he has never since felt so rich as he did back in his teenage days, when he had yet to take on the adult encumbrances of mortgage, utilities, cable (or even cell phone, come to think of it). His earnings were truly discretionary for music, gasoline, and entertainment. To this day he will recite “two-sixty-two-forty-two” as a pet number - the amount of his first car payment and the check he proudly wrote every month.  

Teenage years are a great time to learn to manage money before the big ticket items set in. Laura Hinton is a BirminghamMom and financial planner who shares her advice on how to help teenagers learn financial responsibility:

No child’s education is complete without instruction on day to day money management.  Every young person should be exposed to good habits when it comes to spending, saving and managing money.

 At age 16 many teenagers are on the road and driving a vehicle.  This activity alone requires the purchase of fuel, auto maintenance, insurance, registration, and many times payment for the vehicle itself.  This is a good opportunity for parents to make their children aware of the cost involved and the methods of using money wisely to obtain something they want or need.

 Every teenager should have a checking account and a savings account of their own to manage.  Parents and/or guardians should go to the bank with the child and help them open the accounts.  It is such a good experience for a young person to watch how a professional business transaction is handled.

 Parents should show their children how to manage and balance their accounts, explain the fees incurred by overdrawing the account, and help them develop a working budget.  Young adults should not be given credit cards.  Use of credit teaches bad spending habits and creates an accepting attitude toward debt.

 Open dialogue and respect need to always be a part of the discussion of money.  This can be a very emotional lesson to teach but one that is vital to your child’s future financial security.  Although we mention your teenage children here it is never too early to begin educating your younger ones on this issue.  Please look for my next article, “Young Money Managers”.

Laura, thanks for the instruction and for reminding us that money management is an essential skill that is required all our lives. Like every generation, our kids will face a whole different set of circumstances as they establish themselves, and we need to help them get prepared. I’m looking forward to your thoughts on Young Money Managers.

Laura E. Hinton, ChFC, is a principal with Hinton Financial Consultants. She can be reached at lhinton@finsvcs.com