Real-World Finances for Teens

As children approach adolescence, they are ready to assume greater financial responsibility and learn more about adult money management. We have found that there are three main areas where we need to work with our children: financing more expensive personal wants and needs, teaching them the real cost of automobile ownership, and learning what it costs to run a household.

1. Personal expenses. As teenagers become involved in more activities and begin to feel more desire to purchase clothing or other items, they need more money. We have found as a general rule that expenses that can’t be met through normal means of allowances or earnings can be financed using a matching-funds strategy. The teenager becomes responsible for paying 50 percent of the cost, and if that is achieved the parents make up the difference. More than once we have noted that a teen’s desire for a certain product or school trip is inversely related to the amount that he or she is expected to contribute.

2. Automobile expenses. While many teens dream of owning their own car one day, few understand how much of the family budget car expenses can consume. In one family, six months before teens obtain a driver’s license, they begin tracking automobile expenses. They add up the cost of loan payments, insurance, repairs, gasoline, oil changes, new tires, and registration, compute the average cost per mile to drive the car, and then report their findings in family home evening.

   Other ideas to help teenagers understand the costs of car ownership include asking them to pay a portion of the fees required for driver’s education classes, to create a budget that includes car expenses, and to share the cost of insuring and registering a car.

3. Household expenses. Most young adults are surprised how expensive it is to operate a household, even a small apartment. One way to help them become realistic about costs is to involve them in monthly budgeting and check-writing activities. While parents may wish to keep some financial matters confidential, other areas, such as paying utility bills and staying within a grocery budget, can be shared with teens. One family rotates bill paying each month by asking one of their teenagers to write out the checks and prepare them for a parent’s review and signature.

This activity enables teens to preview many of the financial responsibilities they will assume as adults.—Jerry Mason, Vienna Ward, Oakton Virginia Stake

Illustrated by Joe Flores