Teens and Money – Transitioning from Childhood to Adulthood Finances

Several years ago, I wrote a post about how we handle money with our children.  I spelled out our philosophy on allowances, paying for chores, and what jobs our children could do for extra pay.  At the time, our oldest was 13, and while the principles have stayed the same, the practice has change a bit now that he is advancing quickly toward adulthood.  I thought it might be a good time to offer a new perspective on money as it concerns the teenagers in our home.

(You can read that original post HERE.)

Teens and Allowances

I mentioned in my Children and Chores post that we do not pay for chores and we do not give our children an allowance.  This continues into their teens.  The principle behind this is the fact that in adulthood, there are responsibilities a person has toward the upkeep and running of a household that is not a paid job.  Our goal is to teach our children to take care of those responsibilities without needing to be paid or praised for them.  It is simply something that is expected.  Our society no longer places value on a job well done for the sake of doing a job well done.  Too many people expect accolades for their effort, and too many people feel a responsibility that lacks excitement and financial gain isn’t worth their time.  I do not want my children to follow this tide.

I also want to add that I do understand the reasoning behind giving teens an allowance in order to teach money management; however, I do not believe unearned money is the best way to do this.  When the money is simply handed to you, you have no real connection to that money, so the concept of money management doesn’t have the impact it has when it is money earned by the teen.  But, how do they earn money if not by allowance?

Teens and Income Within the Family

As I mentioned in the previous post on this topic, we pay for jobs that are “above and beyond” the expected.  For instance, we do not pay for babysitting when one of us needs to run to the store, but we will pay for babysitting if we need to be gone for several hours.  This is something we would have to pay someone else to do if it weren’t done by our teenagers.  Same goes for detailing the vehicle or major handyman jobs.

We also allow grandparents to pay a fair wage when the children go to help with a big project.  We encourage our children to serve their extended family, but we also know that the grandparents would rather pay our children than have to hire the work done outside the family.

Because this money is earned, it is more useful for teaching money management.  More on that in a moment…

Teens & Jobs Outside the Home

Many teenagers like to get jobs outside the home to have some spending money of their own.  There area two sides to this coin that need to be considered carefully before diving headlong into an outside job.

On one side, a job teaches responsibility to someone other than a parent, as well as teaching time management.  Both of these are very valuable lessons.

On the flip side, is the fact that an outside job (unless it is very flexible) has the tendency to separate the family and create a lot of scheduling chaos.  In the last city we lived in, our son had a very flexible job as a trapper at a sporting clays lodge.  This allowed us to take family vacations, work around his schooling, and not be beholden to his job.  Since the move, we have encouraged him to wait on taking a job, and not take just any job.  While we do not want to teach him that certain jobs are “beneath him” or that it is better to do nothing than take a job that isn’t “perfect”, we also know he has the rest of his life to work, and only another year or so to be fully a part of all family activities.  Because of this, we have been praying for another flexible job that would give him some outside money while allowing him to participate in family activities.  (He already has something in the works, but I don’t want to jump the gun telling you about it until we see how it pans out. 😉 )

Another thing we encourage when it comes to working an outside job, is looking for a job that will teach or further a skill.  While flipping hamburgers is definitely a job that will make your teen some spending cash, it is not always a job that will teach him or her a needed skill or hone a skill they already possess.  A good example of this is the sporting clays job.  While Blake has no desire to spend his life throwing skeet, he would like to own his own business some day.  The lodge he worked at was owned by a family who were more than willing to teach him the ins and outs of owning a business.  He was also exposed to all the people with varying careers who came to shoot.  In between stands, he was able to chit chat with them, exchange business cards (we highly recommend your teen considers having business cards made up for networking purposes), and learn more about their vocation and businesses.  He always came home from work with great information and stories.

Teens & Money Management

How you choose to teach money management is a matter of personal preference.  My son decided to use the 80-10-10 method (80% spending, 10% savings, 10% tithe) for his finances, but more often than not, he ends up putting even more into savings.

When I was a teen, I used mason jars to separate out my money.  I had 4 jars:

• 1 – Savings
• 2 – Miscellaneous Spending
• 3 – Tithe
• 4 – Specific Savings (This is how I saved up money to have my pickup windows tinted.)

You can use the envelope method.  You can actually open checking and savings accounts in your teen’s name.  You can even do some investing if you so choose.

Speaking of investing – if your son or daughter has a talent or skill that has the potential to be an income generator, consider investing in their “business” the way you would invest in a college fund.  For instance, our daughter is a budding photographer.  She’s good at what she does and she’s serious about it.  Because of this, we’ve chosen to help purchase photography supplies and lenses, and helped her start up a more professional website.  (We usually offer half the money she needs for something.)

We also invest in our children by sometimes “paying” them in other ways.  For instance, our daughter chose several years ago to sponsor a Compassion Child.  The photography work she does on this blog and for our family pays for that sponsorship.  Likewise, we have compensated our son for major jobs by paying his way to an event he’s really wanting to participate in that would be money out of his pocket otherwise (like TeenPact National Convention or pheasant hunting in South Dakota).

Items we regularly require our teenagers to pay include, but are not limited to, the following:

Travel expenses to events they want to go to – this teaches them not to take transportation and food for granted, and not to order the steak when the hamburger will do.

Extra tools and clothing for their job –  A pair of gloves, a pair of jeans, a pair of boots – these are things we are willing to fund fully, or at least half, but extra items that are wants and not needs are paid for by our teen.  For instance, when he worked at the shooting lodge, he decided he’d like to have a pick stick to pick up shotgun shells several at a time.  He found the one he wanted and purchased it with his own money.

This would also be our policy if our children played sports.  We will pay for the basics, they are in charge of anything extra – including an upgrade on shoes from the very basic of models.

“Toys” & Entertainment – Even big kids have toys, and those toys (unless they are gifts for birthdays or Christmas) are not funded by mom and dad.  My son airsofts.  Your child may like video games or sports or certain collectibles.  As adults, we are expected to fund our own entertainment.  The sooner a teenager learns that, the better off they will be.  They won’t grow to expect others to carry the responsibility of paying for their unnecessary items.

This brings me to the final point of this post.  Our teens are expected to be responsible with their money and their time.  As they age, they are given more and more privileges, leeway, and choices.  About 6 months ago, we gave our son nearly total control of his finances.  This past week, we gave him nearly total control of his schedule.  He is a man.  He’s proven this time and again, so it was time for us to let go.  As long as he lives under our roof, we have some control over his finances and time, but that control is nominal.  We are here to lend advice and ideas as needed, but we are transitioning away from planning every aspect of his life and into a new season where he plans his present and prepares for his future.

How do you handle money with your children – especially your teens?  Have you found the transition to be difficult?  What are your goals when it comes to teaching your children money management?  Be sure to share your thoughts in the comments section!