Teach teens to spend and save responsibly

When kids leave home, all parents hope they have the life skills they need to succeed. During those crucial teenage years, parents teach their children how to pick friends, how to do well in school, and maybe even how to clean their room. This is also an important time to teach children money-management skills -- while the penalties are low and before the burdens of real-life expenses begin.

"The biggest mistake parents make is handing out an allowance without any money-management skills to go along with it," says Laurie Campbell, a program manager at Credit Counselling Canada. Parents need to sit down with their teen to discuss savings, credit, living within one's own means, and how to avoid identity theft.

Saving: responsible money management
Encourage your teen to pratice budgeting his money so that he can put aside some savings. Challenge your children to save 10 per cent of their income, suggests Joe Chidiak, a banker and volunteer with the Canadian Bankers Association's There's Something About Money money-management program for teens. Or discuss saving for a goal. If they want a used car, for example, sit down with them and figure out how much theyll need to save to have the keys on their 16th birthday.

In many houses, the most important financial issue for teenagers is saving for post-secondary education. A frank, early discussion about financing options and what theyre expected to contribute can help them avoid student debt, and teach them the value of saving toward a long-term goal.

Spending: the value of money
It's also important for your kids to learn how to spend, so they learn the value of their money and how expensive shopping can be. Make money a subject you discuss. Take them along with you on grocery shopping trips and explain your choices for what you're buying; talk about where you got the money to go on vacation. And make sure your spending habits aren't out of control; like everything else in life, kids learn about money by example, too.

Chidiak says the kids he teaches in his There's Something About Money program are interested in this information and understand the importance of money management. As does Chidiak himself: "I always give them the same line: 'I wish I'd had this information when I was in high school. I would have run my finances completely differently.'"

How do you teach your kids about money? Discuss in our forums!

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