Why Your Teen’s Money Habits Are the Way They Are

When I was young, my family deemed me “The Spender”.

While I did pretty well academically, played in the school orchestra, participated devotedly to my youth group, my parents thought I was irresponsible with money.  My sister, on the other hand, was known as “The Saver”.  She was “responsible” with money.  It’s not like they actually said the words, “You are financially irresponsible” to me, but it was clear that my sister and I had well-established reputations with money in our family.

Not only were these labels powerful in terms of how we thought of ourselves and how we ended up dealing with money in our adult years, they were completely inaccurate. Rather than reflecting our level of responsibility, they simply reflected our responses to a lack of basic money management training.

It is well-established that parents are children’s primary financial educators.  My very conscientious and well-intended parents thought they were doing a great job in this capacity.  They thought that giving us an allowance and expecting us to supplement it with part-time job would teach us to be responsible and prepared for adulthood.

Instead, what happened is what happens with almost everyone.  We had incomes, but no training.  My parents, with all due respect, thought that money habits are a function of personality, and they expected us to “sink or swim” with our money.  Some people learn to swim that way, but it’s a pretty risky way to teach the breaststroke, don’t you think?

There are many reasons why people behave the way they do with money, especially when they aren’t taught to manage it strategically.  One HUGE factor relates to goal-setting.

My goals with money, as a kid, were to use it to be part of the crowd (to wear cool clothes and to go out and have a good time with my friends).  My sister’s goals were to avoid problems and be considered “the good one with money”. Neither of these goals led to healthy financial lives as adults.

Consider that our teens’ money habits and attitudes are formed around their financial goals.  If these goals aren’t discussed and formed in a supportive and intentional conversation, then they are simply reactions to their immediate needs on a personal level.

Talk to your teen

It’s tricky, because we aren’t conditioned to talk freely about money.  My parents thought it was somehow inappropriate to tell me how much money they made and how they figured out how to buy, save, invest, and give using their incomes.  I didn’t know how much things cost, I didn’t know why they said “WE CAN’T AFFORD THAT”.  Yet, I was expected to make informed and rational decisions about my own money.  And that was that.  I didn’t have any financial goals at all, other than to marry someone wealthy, truthfully.  I had no sense of a goal to organize my finances around.  THAT’s why I spent money the way I spent it.  My sister’s goal was to never be broke and look like she was financially irresponsible.  That’s not a financial goal, either.  And that’s why all teens spend money the way they do—their money habits are rooted in their financial goals.

So, if we are going to educate the teens in our lives and help them develop effective habits with money, we can start by opening up to them about money.  We have to have open lines of communication in order to talk to them about their financial goals.

What does a healthy financial goal for a teen sound like? Does it sound like:

1. I will buy a car next summer, OR
2. I will save all my money, OR
3. I will worry about it when I get older, OR
4. Don’t bug me, I am busy.

No. These are goals and reactions that I hear all the time from kids and even from their parents who aren’t sure what to make of them.

When you have really opened up the lines of communication with your teens and talked to them about what it’s like to have money problems when you’re an adult and how much easier it is to build wealth when you start young, and when they know you are on “their side” when it comes to money issues, then, you can talk about meaningful financial goals.

A meaningful financial goal for a teen sounds something like this: “By the time I am 65 years old, I will have $X thousand dollars saved in an account so I am financially secure.  Until then, I will earn, save, spend, invest, and give money in a planned way so I can have options for my life, so I can take care of people I love, and so I can make a difference in the world in ways that matter to me.”

How to fulfill that goal is a lesson that only matters AFTER he sets his mind to that.  That’s a different issue altogether.

But talk about financial goals to your child. Let them know how you spend your money, and how they can invest their first paycheck. YOU are the key to your teen’s financial future.  

Easy Action:  Start a conversation with your teen about what causes matter to him or her.  Then explore the Internet for ways to contribute to that cause.

Resource at Your Fingertips: Check out JustGive.org for easy ways to contribute to organizations that are meaningful to you and your teen.

Jill Suskind, M.Ed. is a 25-year veteran public school teacher. Since 2007, she has been working with parents and their teens, providing innovative, practical, and effective resources and guidance for preparing teens for adulthood with positive money habits and attitudes. Jill owns and operatesWealthQuest for Teens, Ltd., and Your Teen’s Money Skills, Inc, and currently serves as a member of the Financial Literacy Committee of the National Association of Estate Planners Council.

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