Financial Responsibility Amongst Teens

Teaching teens can be challenging as they become more independent, especially when it comes to educating them about managing their money and finding the right balance between saving and spending. This article outlines some strategies you can use to teach your teen how to be financially responsible, so that they develop the self-confidence and skills needed to successfully manage their money.

1. Teach Teens To Work For Their Money

When your teen has to work for what they want, they will have a better understanding of the effort it takes to make a certain amount of money versus how easy it may be to mindlessly spend it.

It may be difficult for your teen to get a job if grades and extracurricular activities take priority. However, this does not mean that you should freely give your teen money for what they want without them working for it. Learning that money has to be “worked for” is vital to understanding and getting a feel for financial independence.

For example, the teen could earn extra allowance by doing chores around the house or doing well in school for a particular exam or semester. If your teen does get a part-time job to supplement the allowance you choose to hand out, you may also wish to encourage them to save a portion of it—introducing the concept of “paying yourself first.”

2. Teach Teens To Save Money

Now that your teen is no longer a child, they are not saving for a short-term goal such as buying a toy, but larger goals, such as for an electronic gadget, car or university/college. Saving is one of the most important money lessons that you can teach your teen and you may wish to open a savings account that will pay interest.

To promote and motivate this good habit, you may also wish to consider rewarding your teen for saving to reinforce the idea that saving pays off.

One example is to match what he or she saves, such as contributing a dollar for every dollar saved towards a long-term goal. You can even begin introducing your teen to the basics of investing by opening a custodial account if your teen is a minor, and an account with a low initial contribution for an older teen.

3. Teach Teens To Budget

Knowing how to budget ensures that your teen will always have enough money for the things that they need and will know how much is left over for non-essential purposes. For example, if your teen receives $150 per week for weekday lunches/snacks, they should understand not to spend $150 on a single meal. This way, your teen will learn how to divide the $150 across the weekdays and potentially end up with an amount that they can save towards other expenditures.

With budgeting, your ultimate goal is to teach your teen how to find the right balance between money coming in, money going out and money saved. A useful tip here is to consider giving a monthly allowance, so your teen is given the financial responsibility to stay on top of their own expenditures for an entire month.

4. Teach Teens About Credit

At this time, you may not wish your teen to have a credit card; however, you can still help your teen develop a basic understanding of “credit” and how it works, including the importance of using credit wisely, paying bills on time, and not taking on a large amount of debt.

A good starting point is to provide your teen with a prepaid spending card, which works like a prepaid phone card, but looks like a credit card. This allows you to monitor your teen’s spending habits as they gradually gets the feel of using a “card,” prior to cosigning a credit card for them. By allowing your teen to practice in this way, they will be better prepared to build their own credit history when the time comes.

The Bottom Line

Proactively teaching financial responsibility to your teen helps them to learn good habits that they will use and appreciate throughout their adult life.


Bloom Investment Counsel, Inc. is a well-established Toronto-based independent, privately-owned boutique investment management firm providing customized, actively managed, Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions and trusts.

Founded in 1985, Bloom has experience in managing in excess of $2.5B in assets over the years. We believe that generating independent cash flow is central to the success of our clients’ portfolios because it provides capital for the present day, if needed, while continuing to preserve and build wealth for the future.

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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.

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