Skip to main content

Equipping Your Teenager with the Needed Financial Tools for Adulthood

3 min read
Equipping Your Teenager with the Needed Financial Tools for Adulthood

Teaching teenagers how to manage their finances when they become adults is one of the most important lessons that a parent can impart.

Here are four basic lessons on money-management for teens that parents should plan to teach their teenagers early on:

1. Credit is not the same as cash.

Teenagers are likely well-versed in how to use a credit card (”swipe the plastic and you pay later” – or so they may think). However, they may not understand credit card rates and fees.

LESSON PLAN:

  • Explain how interest rates, late fees, and other charges can ultimately increase the amount that your teen owes.
  • Teach how to manage debt and the importance of paying bills on time, preferably in full or else by making more than the minimum payment due, and of avoiding late or missed payments.

2. There is no such thing as “free.”

The sooner that your teenager understands this concept, the better. He or she already knows that everything at the store has a price and that you have to make a purchase in order to receive the products or services. What he or she may not realize is that services and utilities, such as electricity and gas, cost money as well.

LESSON PLAN:

Have your teen sit with you as you pay the family bills each month. You also could have him or her write out some of the checks and log them into your checkbook, to get a better feel for the process. You’ll be giving your child a hands-on understanding of how much the monthly expenses cost, from the mortgage payment to utilities, telephone, and Internet charges. Who knows, maybe your teen will start thinking twice before leaving on a light!

3. Don’t spend more money than you have.

It’s a simple concept: Live within your means and don’t let spending exceed your income. This can often be easier said than done, which is why it’s important to teach teenagers how to budget and how to track their spending.

LESSON PLAN:

  • Make a list, starting with income: Does your teenager have a part-time job? Do you give your teenager an allowance? Does he or she receive income or money from other sources?
  • Make a second list, for expenses: What are they, and the amounts? Help your son or daughter to calculate how much money he or she will need each month for expenses. The key is to visually see the difference between things desired and things actually needed.
  • An additional approach might be to include your son or daughter in helping to calculate and create your annual family budget. This can help demonstrate the concepts that you have been teaching for his or her budget, applied on a larger scale.

4. Put money aside for a rainy day.

The notion of having to wait in order to save up for a large purchase can sometimes be frustrating, especially if someone is used to instant gratification. Encourage your teen to get into the habit of “paying yourself first.”

LESSON PLAN:

  • Teach your teenager that every time a paycheck or allowance money arrives, he or she should immediately put a certain percentage of it into a savings account.
  • It’s also important to stress the importance of having a nest egg of savings for unexpected expenses. For example, is your teenager saving up to buy a car? Make sure that he or she understands that once the vehicle has been purchased, the need for savings does not end. Any repairs and tune-ups, in addition to fuel and insurance, all cost money, too.
Was this article helpful?
50%
50%
View All Money Matters Articles

Swipe to see our products & get a free quote

Term Life
Term Icon

Term Life Insurance

Adults 18-70

Flexible coverage at a price that’s right for you.

Whole Life
Whole Icon

Whole Life Insurance

Adults 18-70

Keep it for life and build cash value.

Guaranteed Life
Guaranteed Icon

Guaranteed Life Insurance

Adults 50-80

Coverage for adults between 50 and 80 years old.

Accident Protection
Accident Icon

Accident Protection

Adults 18-69

Help protect loved ones without busting your budget.

Grow-Up
Grow-Up Icon

Grow-Up® Plan

Children 14 and under

Valuable protection that grows with your little one.

College Plan
College Icon

Gerber Life Insurance College Plan

Children 18 and under

Safe, secure and easy way to help pay for college.

Term Icon

Term Life Insurance

Get a free instant quote

Your quote

Get a Free Quote

Have you used tobacco? *

* Indicates required field
** Currently not available in New York

Still want to learn more, view our product page for more information.

Whole Icon

Whole Life Insurance

Get a free instant quote

Your quote

Get a Free Quote

Have you used tobacco? *

* Indicates required field
** Currently not available in New York

Still want to learn more, view our product page for more information.

Guaranteed Icon

Guaranteed Life Insurance

Get a free instant quote

Your quote

Start here. It's easy!

Let us customize a Guaranteed Life Insurance quote just for you.

* Indicates required field

Still want to learn more, view our product page for more information.

Accident Icon

Accident Protection

Get a free instant quote

Your quote

Get a Free Quote

Just enter the state you live in to get an instant quote.

* Indicates required field

Still want to learn more, view our product page for more information.

Grow-Up Icon

Grow-Up® Plan

Get a free instant quote

Your quote

Get Your Free Quote Now

See how little it costs to help protect your child

* Indicates required field

Still want to learn more, view our product page for more information.

College Icon

Gerber Life Insurance College Plan

Get a free instant quote

Your quote

Start here. It's easy!

Tell us about yourself, and we'll customize a plan just for you:

Child's Age *
Relationship to Child *
Your Age *

* Indicates required field

Still want to learn more, view our product page for more information.

Get inspired with our free e‑newsletter for parents

Get our free parenting e‑newsletter with:

– Parenting advice

– Money-saving tips

– Life insurance blogs

No thank you

By signing up, you agree to occasionally receive emails from Gerber Life. Unsubscribe at any time. View our privacy policy.

We’d like to notify you about updates, videos, new products and more.

Notifications can be turned off at any time in your browser settings.