Teens today face pressures like never before to buy, consume and run up debt. Kids are bombarded with advertisements for the latest gadgets and pressured to “keep up with the Joneses” by having the latest fashions and toys.

Technology has elevated buying-on-a-whim to an art form. Sitting at their computers or thumbing the keys on their smart phones, today’s teens can download or order a world of music, entertainment, games, books and services that either didn’t exist a decade ago or at least required the teen to leave the house to purchase.

The need to drive – or be driven – to a retail store sometimes created a sufficient buffer to quell a teen’s impulse to spend, or at least presented the prospect of giving mom and dad an opportunity to intervene. But no longer. These days, money in and money out is mostly electronic. Direct deposit, debit cards and online banking have each accelerated the pace of money – and accordingly, the speed at which our children must make the right or wrong financial choices. New services such as Google Wallet allow people to turn their phone into a wallet. This makes it even easier for teens to spend money, often without any concept of what that means.

Teens need to be given a clear, alternative vision to the “spend, spend, spend” mentality that surrounds them. Fortunately there are many things parents can do to teach their kids sound money management. The key is in helping kids understand the difference between a “need” and a “want.”

Here are some tips for parents to teach their teens about financial responsibility:

  • Expose teens to your full family financial picture – including what you earn, what you spend, what you borrow, and how you invest and save. Hold regular “family night” discussions with the whole family during which you go over the family budget and review where the money is going.  You may wish to have them participate by writing checks, reconciling accounts and helping to set and monitor your family budget.
  • Put your kids to work. To truly value money, teens need to earn their own income, whether through outside jobs, entrepreneurial ventures or by getting paid for family chores.
  • Teach kids to save: I recommend the “40/30/20/10 Saving Rule:” 40 percent of their earnings can be used for spending, 30 percent should be set aside for short-term savings, 20 percent for long-term savings and 10 percent for donating. Teens who sort their money into these categories every week will develop responsible lifelong money-management skills.
  • Don’t forget charity. Encourage your kids to set aside a regular portion of their earnings and income for a good cause, be it church or other worthy non-profits. Such gifting will be returned to them many times over in terms of the character it builds.
  • Have fun with it. Talking to teens, and getting them interested in proper money management, need not be all spreadsheets and financial reports. Some parents use games such as the classic Monopoly and Robert Kiyosaki’s popular CASHFLOW 101 to broach the subject of money management. Teen-friendly movies, television programs, books and even songs, such as Gwen Stefani’s hit Rich Girl – “No man could test me, impress me, my cash flow would never end…” – can be a jumping off point to a meaningful conversation about dollars and good sense.
  • Paint a vibrant picture of your adolescent’s fiscal future – one free from the money worries that envelop so many young adults and their parents. Help teens formulate their own vision of what a life of financial self-reliance and freedom will mean for them.

Teaching by example is absolutely critical. If you tell your kids one thing, but do another, they will catch on very quickly. Explain how there are things you’d like to buy that you decided to forego and why. And don’t be afraid to openly discuss the mistakes you’ve made and what you’ve learned from them.

Nothing builds a young person’s self-esteem faster than learning the lessons that can help them become financially independent for life. And the teenage years are the perfect time to teach kids the saving, spending, earning and investing habits they’ll require to enjoy a lifetime free of financial strain and worry.

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