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You are here: Home / Family / Beyond Allowance: Teaching Teens to Manage and Grow Their Money

Beyond Allowance: Teaching Teens to Manage and Grow Their Money

March 19, 2025 By Bobby | This article may contain affiliate links. For more information visit our Disclosure

Beyond Allowance Teaching Teens to Manage and Grow Their Money

Teenagers get a tough time of it in many circles these days, accused of any number of moral failings, and it’s often not appreciated what a difficult life phase adolescence is. What they need more than anything is some reassurance and help dealing with the transition to adulthood, and as a financially responsible parent you can help them in a number of ways. One of these is giving them the tools needed to be financially independent, which will set them in good stead before they head off to college.

Encouraging financial independence in your teen

Most teenagers end up getting a part-time job at some point, and this is to be encouraged. In doing this, the smartest move a parent can make is by showing them rewards beyond the wage they earn or the proceeds of their side hustle. Working for their own money will feel all the more rewarding if they can see how it will benefit them in future. For example, if you set up a RESP to fund their post-secondary education, you can assure them that their educational costs will be met. While you do this, recommend that they set aside some of their earnings to meet the additional costs of college.

If they are confident that their tuition will be paid, and perhaps some or all of their dorm costs, they will be more likely to keep hold of some money to make college life all the more comfortable and enjoyable. Save enough money and they could possibly buy a car, or augment their dorm rent in order to live off-campus in a more comfortable place. It’s really up to them how they use it, but if you can get them thinking of the future it helps a lot.

Teaching budgeting and having goals

Once a teen is earning their own money, it is a good idea to teach them how to budget it. It’s natural that they will want to spend at least a portion of what they own – and right now, when they don’t have bills to pay, that’s no bad thing. But it is a good time to encourage the 50/30/20 rule.

This means that 50% of what they earn goes into essentials such as a college contingency fund, 30% is for them to spend on whatever they wish, and 20% can be invested or saved in a high-yield account. If they’re downcast about not getting to spend it now, point out that money as a student is a lot more fun than as a high-schooler.

Investments

Learning about investing may seem to most teenagers like the worst imaginable use of their time. And if you suggest it to them as “learning about investing”, there’s a good chance they will see it that way. But they don’t need to be learning about the stock market; concepts like high-interest accounts and passive income will sound pretty sweet to any teen. Show them how yours works; indicate how much you have put in and how much it has become. The concept of “more money” has never been off-putting to anyone.

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