A Time of Opportunity
A notable shift in a family’s financial picture provides a rare opportunity to rethink spending and saving habits. An unanticipated increase in household wealth or income, for instance, may present an opportunity to instill the right financial habits in your teens that can carry them into adulthood. Just as our grandparents of the Great Depression era developed deeply ingrained attitudes about finances from their experiences of austerity, our teens can learn from these lessons, especially in a time of prosperity.
The first step is to make your teen a partner with a stake in the family’s financial enterprise.
For most teens, it’s not about the money itself. Not yet anyway. It’s more about what the money can get them—entertainment, clothes, electronics, or a car. This impulsive situation presents an opportunity to turn these expenditures into motivators for learning about budgeting, savings, investing, and smart financial management.
Teens have a stake in the family’s financial picture, so it is important to communicate the family’s goals, especially as they relate to a teen’s desires. This doesn’t mean that the things they have been enjoying will suddenly stop. They simply need to become more accountable for their expenditures and begin to gain a sense of satisfaction from smart financial management. Having a participatory role in the family budget is an important step in their development.
Practical Steps to Financial Literacy
1. Set Goals and Priorities. It’s a good time to start your teen with a financial journal for budgeting and record-keeping. An app or a spreadsheet may work better for some. Get them to distinguish between needs and wants and then prioritize them.
2. Develop a Budget. Some teens are looking ahead to buying a car, a pet, or financing a trip. Their savings for these future needs should be a part of their budget. Both their income and expenses should be negotiated to the point where everyone in the family understands the overall household picture.
3. Establish a Banking Relationship. Have your teen establish a relationship with a bank and meet the manager. Help them set up separate “savings” and “spending” accounts, perhaps with a debit card. Have them contribute to a savings account or a college 529 plan.
4. Experience the Power of Saving. If teens understand that their wants will need to be financed from their savings, they will see the value in it. You can encourage their saving habits by applying a “match” to their savings, much like an employer match to a 401(k) plan.
5. Show Them the Path to Wealth. Teens have aspirations and dreams. Given the chance, they will share them with you. Show your teen how they can build wealth by the age of 40 by saving just $250 – $500 a month, and explain how inflation will impact this goal.
Adults in Training
Teens are adults in training. Given the opportunity, they will demonstrate increasing responsibility and a penchant for smart financial management. They can be motivated by their own wants and needs; however, when they begin to see the vital role they play as part of the family financial picture, they may surprise you and exceed your expectations.
Guiding your children toward financial maturity is one of the most important parts of a comprehensive family wealth plan. The first step is a simple conversation. If you’re at a point where a clearer, more integrated roadmap for your family’s financial future could be beneficial, we invite you to book a complimentary Strategy Session with our team.
© 2025 MD Wealth Partners Inc. All Rights Reserved.
Investment advice offered through MD Wealth Partners Inc., a Registered Investment Advisor in Westlake Village, California. The information and opinions expressed in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. It should not be considered a solicitation for the purchase or sale of any security.
Please consult your own legal or tax professionals for information regarding your individual situation. Investing involves risk, including the possible loss of principal, and past performance is not a guarantee of future results. Information throughout this site is obtained from sources which we and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information.