Episode Summary:

In this episode, Matt and Charla discuss the importance of teaching teens financial responsibility by giving them ownership over their own expenses. They explore practical strategies to help teens understand the value of money and make informed financial decisions.

Discussion Highlights:

Real-Life Financial Management:

– Charla emphasizes the importance of teens handling real-life expenses, not just allowances for trivial items. This includes significant costs like extracurricular activities and college savings.

Decision Making and Budgeting:

– By giving teens a budget, they learn to make choices based on their priorities. For example, choosing between a high-end item or several less expensive ones fosters better financial decision-making.

Building Financial Muscle:

– Allowing teens to experience financial tension prepares them for future financial independence. This practice also helps them develop a better understanding of budgeting and saving.

Parental Involvement:

– While teens manage their allocated budget, parents should still guide and support them. This dual approach ensures that teens are learning while still having a safety net.

Examples:

1. 
   
2. Extracurricular Activities:
   

– Teens often want to participate in numerous activities without understanding the associated costs. By providing them with a set budget for these activities, they learn to prioritize and manage their expenses. This includes registration fees, equipment, and travel costs.

2. 
   
3. Food:
   

– Give teens a weekly or monthly food budget for their snacks and extras. This helps them learn to shop wisely and manage their own food expenses. It’s a practical way to teach them about the costs of their dietary choices and encourage them to make healthier, budget-friendly decisions.

3. 
   
4. College Expenses:
   

– Discuss the costs of college early on and set clear expectations about financial contributions. Encourage teens to save for college and seek scholarships. This helps them appreciate the value of their education and motivates them to perform well academically.

Practical Tips for Parents:

1. 
   
2. Set Clear Budgets:
   

– Provide a specific amount for activities, food, and other expenses. Make sure teens understand they must stay within this budget.

2. 
   
3. Encourage Work:
   

– If teens want more than their budget allows, encourage them to find part-time jobs to cover the additional costs. This teaches them the value of earning money.

3. 
   
4. Discuss Long-Term Goals:
   

– Have open conversations about future expenses like a car, living expenses and college. Make sure teens understand the financial commitment from the family and start saving early to help make those future plans succeed.

Connect With Us:

To read more about this (or past topics) go to Charla’s blog:  https://beyondpersonalfinance.com/our-blog

To subscribe to the weekly email with links to our podcast and blog, go here:  https://beyondpersonalfinance.com/subscribe-1

To learn more about our unique products designed to increase your children’s understanding of how money works in the real world, go here:  https://beyondpersonalfinance.com/