In this lesson you are going to learn how to talk to your teenager about money so that they can become more responsible with it and manage it properly.
In it you will learn:
- What money really is
- Money versus abundance
- The negative beliefs associated with money
- How to teach your teenager to be responsible with money
- How to teach your child to create a healthy relationship with money
- A 10-step plan you can explore with your teen
Overview
This lesson plan focuses on our beliefs, perceptions, and relationship with money and does not go into detail about the technical aspects of finance. While I do talk about budgeting and priorities to an extent, a proper finance course is a different type of class and you will need to get this information from somewhere else.
“Money doesn’t grow on trees you know?”
In the old days, this was the basis of what most teenagers were taught about money. They would approach their parents and the response was always fear based with parents telling their kids that money doesn’t grow on trees. Every parent dreads when their kid comes asking them for money. On the one hand you want to give your kids everything. On the other hand, you struggle with money and can’t afford to give them any; or you have plenty of it and are concerned they may become spoiled.
Regardless of what your situation or circumstances are with money, most people can agree that money can cause a lot of pain and hardship. We become obsessed over money to the point that it can tear families apart. Because many of us were not taught how to be responsible with money and use it in a healthy and constructive way, money management is one of the biggest hurdles people face in our world. So how can you best teach your teenager the responsibilities that come with money?
Money Equals Value
As children, we associate money with mom and dad. This was our source for money. When we needed something we would ask our parents for it. And most of the time, we would get it. So as children we would associate money with asking mom and dad for it. Then as we get older, there is a transition that takes place where all of a sudden, mom and dad don’t want to buy us just anything.
It’s important that when this time comes and you want to start to wean your kids off your wallet, you help them understand that money equals value. This is a great time to set the stage for them to learn that they will need to explore and discover what gifts they have to offer the world so they can get paid to do it. It’s important that they associate money with something of value so they can start to ask themselves how they will contribute to society. For more on this read the Career module.
Perception Of Money
Society has a very unhealthy and unbalanced view of money. On one side you have people who define their success in life by the amount of money they have. These are the people who devote most of their life to acquiring things such as cars, a nice house, clothes, and so on. On the other hand, you have people who believe money is the root of all evil so they have very little and struggle to get by. Unfortunately for many, money has become a status symbol for “who we are”. What many fail to realize or have forgotten is that money is NOT real. It’s just a symbol we use to exchange goods and services with each other. It’s a way we vote for what matters most to us. And while there are some deeper issues with how money is being used to manipulate our system (and I will not go into these here), at the end of the day, money is just neutral.
Money Is Neutral
If you want to teach your teenager to become responsible and develop a healthy relationship with money, then the first thing you need to teach them is that money is neutral. Just like a gun, it’s not the gun that kills people; people kill people. It’s not “money that is evil”, it’s how money’s used that can create so much pain. People tend to hand their power over to these symbols rather than accepting personal responsibility for their choices. By telling your teenager that money is neutral and “how” it’s used is what determines the effect, this will help set a healthy foundation by removing any negative definitions around money.
Step 1: Tell your teenager that money is neutral and that “how” it’s used determines the effect.
Money Can’t Buy Happiness
One of the biggest challenges is to teach your child that money can’t buy happiness. For most teenagers, their entire life is based around things such as music, clothes, games, going out, and so on. These are all things that cost money. So depending on your relationship with your teenager and what types of values you have instilled in them, this will play a big role in your ability to teach them that money can’t buy happiness (this is especially tough for parents who did not give their kids enough time and used money as a way to buy their love).
One way to do this is by having them watch the Kardashian show on MTV to point out how this family has so much money yet they fight all the time and are so miserable. Then show them images of children playing in poverty stricken countries like India where they have the biggest smiles on their faces but have no TV, video games, computers, and so on. Their entire day is spent using their imaginations to play and because they don’t attach their happiness to “outside sources”, they’re in control of what makes them happy.
By showing them an example of people with plenty of money being miserable and people with no money being happy, this will plant a seed in them that happiness comes from within and that they’re in control of what brings them happiness. It’s very important that you empower your teenager and let them know that their entire life and how they experience it is their choice and not controlled by outside sources like money. Of course, you must also lead by example and not use money as your source of happiness or sadness.
Step 2: Tell your teenager that money cannot buy happiness and that they’re in control of what makes them happy. Teach them that circumstances do not matter and that only state of being matters. They may not get it right away and you will need to repeat yourself, but eventually as they go through their own experiences it will all start to come together like a giant puzzle piece.
Money Vs. Abundance
There’s a big difference between having money and being abundant. The way society is structured is that we only associate abundance with having money. The truth is, we can be very abundant with the things we enjoy about life and not have much money at all. It’s important that you teach your child the difference between money and abundance because you want to show your child that they can get what they want from life and not necessarily need money to get it. And no I am not talking about stealing. I’m talking about the Law Of Attraction.
Some of you might be familiar with The Secret, and others may not and it doesn’t matter. All that matters is that you understand that when you’re open to all possible ways of receiving and not “fixated” on money being the only way of getting something, you have a higher chance of getting it because you’re open to it. It’s very important that your child be open to allowing the world work its magic to bring him or her what they need or want in other ways besides money.
Abundance means having the ability to do what you want to do, which means that you need to teach your teenager how to define his or her own success in life and not succumb to other peoples definitions and beliefs. Because of the world they’re born in to, they’re bombarded with messages that to feel happy and successful they need to have lots of money, own a big house, have a fancy car, and so on. The truth is that these things may not be the things that bring them happiness.
For example, I have a friend who loves to surf and this is what brings him the most joy in life. He moved to Costa Rica, has a simple job where he only works twenty hours a week and the rest of his time is spent chasing waves all day. For him, he sees himself as being highly successful because he gets to do what he wants on his own terms.
Another example is when I started producing my own events. In the beginning I was not making a lot of money but I made enough that I got to live and pay my basic bills. That being said, because I was immersed in the culture I loved, my entire lifestyle was based around what I wanted to do. I got to play music, hang out with my friends, write about things I loved, and so on. So for me, I was highly successful because I lived the life I wanted and was doing what I wanted to do. I allowed “other things” to come to me and did not need money to get them.
Step 3: Teach your teenager about the differences between money and abundance. Help them to define their own success in life and to be open to allowing things they want to manifest in other ways besides money.
Money Is Energy
In guiding your teenager to develop a healthy relationship with money, you also want to show them that money is energy. It’s how we vote on what we care about. It’s important to teach your teenager that the way our capitalist system works is when someone starts a business and puts out a product or service, every time we buy it we’re voting for them to stay in business. This means it is everyone’s responsibility to learn about the companies they’re supporting and decide if they believe in what the company is producing and how they’re producing it. There are many companies in the world that are destroying our planet by the way they develop their product or service and by purchasing their item, we’re voting for them to stay in business.
Step 4: Teach your teenager that money is just energy and that it’s one way we vote for what we like in our system.
Hoarding Money
Because of the fears that so many of us associate with money, we have become quite hoarders of money. What’s fascinating about this is that regardless of whether you have a little money or a lot, both sides still hoard money. Our entire survival is associated with money and because we fear not having enough, we’re afraid to spend or use the money we have. By teaching your teenager that money is intended to be spent in a healthy and responsible way, they will not develop a fear around money and want to start hoarding it. By definition (of course not everyone is doing this) money is supposed to have a natural circulation so that it touches all of our hands. Keeping money locked away for fear of not having enough (or for hoarding power) is one of the reasons why the system is so unbalanced.
Step 5: Teach your teenager to spend their money and use it in a balanced way. Saving for a rainy day is healthy. Hoarding because you fear something bad will happen is not.
Budgeting & Priorities
Sooner or later, your teenager is going to have to enter the world and start paying their own bills. They’re going to need to figure out how to balance their budget and make sure that they’re responsible with their debts. This means you need to start teaching your teenager how to start budgeting and setting priorities. Whether you give them an allowance or they already work and make their own money, it’s important that you sit down with them and break out the old Excel sheet so that they can visually see what their monthly income and expenses are.
If they don’t have an income yet, then make a number up so they can play along. Once they start to go through the experience of having to choose how they’re going to spend their money on a monthly basis, it will teach them to become more responsible with it. Most kids lack respect for money because they don’t associate it as being their own. When parents just continue to buy stuff for their kids without giving them a reference point as to what can be spent on a monthly basis, it doesn’t give the child any perspective of how money is created and used.
You must also be willing to allow your teenager to fall down and make mistakes from their mismanagement of money. If they exude poor choices in priorities (obviously nothing too major), allow them to experience that choice so if they run out of money and can’t go to the movies, buy more music, and so on, they feel the consequence of their choice and can learn from it.
Step 6: Teach your teen how to start managing and budgeting money and establishing priorities. You need to be willing to let them fall down if they run out of money. This is important because it helps them to explore their priorities.
Savings & Setting Goals
Teenagers live in the moment so they can’t even see a month down the road let alone a year. It’s important that your teenager set at least one goal that they can learn to save for. Whether it is a car, college or traveling, it’s good for them to learn how to set goals and start to save. The best way you can support them in doing this is by talking with them about their dreams and aspirations. Kids love to talk about big dreams and once you engage them in this conversation, it’s much easier to transition into a talk on how to save money. It will give them something to work toward, be excited about and teach them discipline and priorities. It will also help them understand that $50 – $100 every month is a big deal because it can add up over time.
Step 7: Help your teenager set one goal that they can work toward by setting aside savings on a monthly basis.
Credit Cards
Credit cards are our worst and best friends because they can get us into and out of trouble. Once again, I want to point out that credit cards are neutral. It’s how we use it that is good or bad. That being said, giving credit cards to teens and young adults can be frightening. While it’s important that your teenager learn how to build a healthy relationship with credit cards, make sure you feel that they’re showing great signs of being responsible with money. A safe way for teenagers to start off with credit cards is as follows:
They should only use the credit card to act as a debit card so that they can pay off the full amount each month. This way they are growing their credit and not incurring large interest.
You don’t want your teenager or young adult growing debt. They don’t have the frame of mind yet to handle that especially if they don’t have the ability to make a proper salary yet.
The best way to ensure your teenager does not go out of control with a credit card is to make sure you have taught them that money can’t buy happiness. Most teenagers and young adults who get into credit card trouble are addicted to shopping (especially girls who want to buy clothes).
Step 8: If your teenager or young adult can acquire a credit card on their own, teach them the best way to start off is to pay it off in full every month. And make sure your kid is not associating their happiness with “stuff”; otherwise a credit card could be a recipe for disaster.
Don’t Leave It To The Schools
Unfortunately many parents assume that the schools are responsible for teaching their kids about how to manage money. And while some might offer a class here or there (unless your kid is in college learning finance), what schools are teaching is very basic and has very little to do with setting values or developing a healthy and balanced relationship with money. In a recent study reported by the University of California, teenagers are shown to be spending a combined $179 billion dollars a year. However, a national standardized money management test was given to teenagers in the same year and the average score was 48.3 which is a failing score.
The report also noted that:
High school seniors have very little experience in managing money.
Students ages 16 – 22 have never taken a personal finance class.
Two thirds of students admitted they would benefit from such a class.
Nine percent of students in high school and college are already in debt.
So don’t assume that the schools are going to teach your kids how to manage money. They won’t. Heck, our government and schools can’t even manage their own budget so what makes any of us think they’re the best ones to be teaching our kids? They aren’t. This is your responsibility.
Step 9: Don’t leave it to the schools to teach your teenager about money. Take a very proactive role. Get help if necessary.
Projecting Your Fears
Parents get themselves into trouble with their kids when they project their own fears because of their relationship and past experiences with money. Because our survival is based on money, our culture has developed a sick and distorted relationship with money that is deep rooted in fear. These distortions can be broken down into two different perspectives:
1. If You Struggle With Money
If you have come from a background of struggling with money, then chances are you use fear and lack as the foundation when speaking to your teenager about money. You probably say a lot of things like, “We can’t afford it” and “I don’t have money”. Unfortunately when you approach the situation from a negative place like this, you are projecting your own fears of money onto your child and teaching them that money should be associated with lack.
If this is the case, then you need to go through your own healing process with money so that you can build a healthy and centered relationship with it. Otherwise, you will transfer your own fears onto your child and they will end up repeating the same pitfalls you have. The most important thing you can do is use positive words about money. Instead of saying “We don’t have money” or “I can’t afford it”, tell your kids that “I would love to buy this for you but our money has been spent on other priorities”. This is a more accurate and healthy statement. It teaches your teen priorities without being negative.
2. If You Have Plenty Of Money
If you have plenty of money, then your main concern is that you don’t want to spoil your kids and have them associate it with how you love them. Chances are you have seen or experienced first hand how money can spoil kids and make them lazy and unmotivated because they can get whatever they want. You don’t want your kid to believe they can always rely on you to help them out of a situation. How would they ever learn to become self-reliant? However, if you approach your teen with this fear, it can affect and distort your ability to teach and guide them in a neutral way. Many parents in this type of scenario are either too harsh with their kids (“Find your own way!”) or too lax about it (“Do whatever you want”).
Many parents who spoil their kids are doing harm and such a disservice to their kids because they never end up maturing. They become destructive with money and end up associating it with love and self worth. The first thing you want to make sure of is that you never use money as a way to associate your love for your child. This can do a lot of damage to them because they will become addicted to money and needing stuff as a way to feel loved.
In teaching your teenager to become balanced with money, you need to help them make their own money and find their own way but in a loving and constructive way. Where parents get into trouble is when it comes time to cut off their kids, they do it in a harsh way (almost like a slap in the face) and it sends the kid in a downward spiral where they want to “get back at the parents”. Make it a fun and playful game where they are “coming of age” and you want to help them understand that it’s time for them to become more responsible and find their own way in life. Maybe you give them a small allowance in the beginning and help them establish a budget.
At some point you must stop buying them stuff or they will never leave the house! Your teenager must slowly but surely feel they’re going to be living on their own and that it’s time for them to take action and become responsible for themselves. This means you may have to let them fall down every so often if they make poor choices. But remember, do it with love and grace and not an “I told you so” mentality. They need to know you’re still there for them and love them and at the same time, they’re becoming their own person.
Step 10: Don’t project your fears and negative beliefs about money onto your kids. Teach them that money can be used in a positive and constructive way and that when used appropriately, they can develop a healthy relationship with it.
Need Help With Your Teen?
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Want more tips?
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Dating & Sex – How to talk to your teen about dating and sex
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Drugs – How to talk to your teen about drugs
Hurt Feelings – How to talk to your teen if they have hurt feelings
Lying – How to address your teen when you catch them lying
Money – How to talk to your teen about being responsible with money
Out of Control – How to talk to your teen when they are out of control
Overweight – How to talk to your when they become overweight
Partying – How to talk to your teen about partying
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Stealing – What to do if your teen is stealing
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