Why Do Teens Need Money?
While parents are responsible for providing for their teen's needs, they do not have to provide for their every want. Along with more opportunities to earn money, such as an allowance or job wages, teens begin to have more purchasing power than younger children. The teen years are an ideal time to practice dealing with money responsibly because the stakes are usually not as high and parents are immediately available for help in learning how to budget.
Outings with Friends
Hanging out with friends is often your teen's highest priority. In order to do this, your teenager will need money. He may want to go out for pizza with the gang after a school sporting event, catch a movie on a Saturday night or stop by the ice cream parlor on the way home from school. Setting up a social activities budget with your teen can help him learn how to prioritize his activities to fit his budget. For example, he may find he needs to give up daily trips to the ice cream parlor for a few weeks if he wants to have enough money to attend a concert.
Getting a driver's license is the ticket to freedom in many teens' eyes. But cars, insurance and upkeep are expensive. If your teen is saving up for her very own car, remind her that purchasing the car is just the beginning of the costs associated with owning a vehicle. There are also fees to obtain a license, registration and insurance. Ongoing costs include gas, oil changes and car repairs. If your teen opts to use the family car instead, you may still want to have her help pay for gas, upkeep of the car and the difference in insurance costs that come from having a teen insured as a driver. When helping your teen set a budget for automotive expenses, keep her age in mind. Even young teens can start saving up for car costs, getting a head start years before she'll need to use the money and reducing the amount she needs to save each month 2. This sort of budgeting also helps your teen take a long view and learn the value of savings.
Many teenagers would be lost without a cell phone. Once a teen is capable of earning her own money, it is a good idea for parents to require the teens to pay for her own cell phone bill. Staying connected with other teens is important, but countless calls, texts and used data can really drive up the cost of the bill. Parents may not be willing to pay for all the "extras," so a teenager should include them in his budget. This will teach him how to use electronics responsibly, especially if he experiences the pain in his wallet from overage costs one month.
Saving for the Future
Teenagers don't often realize how much living on their own will cost. College is one of the biggest future expenses because it includes more than just tuition. Your teen will also need to purchase books, supplies and food while away from home. Should your teen decide not to go to college, she will need to purchase her own health insurance policy. In addition to future expenses, your teen may want to set aside some money for investing. Learning how to make responsible financial choices about expenses while living at home is good practice for teens who will eventually be living on their own because the consequences tend to be less severe and they have fewer responsibilities to start with.
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