As your teenagers approach adulthood, you may wonder when
they'll be ready for greater financial responsibilities, such as
or credit card.
Your teens may be wondering the same thing.
"More than ever, credit cards, bank accounts and financial
products are in our kids' future," says John Ulzheimer, president
of SmartCredit.com. "We have the responsibility as parents to teach
our kids to use them properly."
Although 36 percent of teens expect to eventually be financially
better off than their parents, 20 percent are unsure of their
current budgeting skills, according to a recent survey from Junior
Achievement USA and The Allstate Foundation. Additionally, 23
percent are unsure of their knowledge of credit cards, and almost
half have no idea how much they would need to pay for college.
"Kids mature at different rates, and the same goes for money
maturity," says family finance expert Ellie Kay, author of the
upcoming book, "Lean Body, Fat Wallet."
She says that while these four signs may suggest that your
teenager isn't ready for more money responsibility, there are still
ways parents can help foster financial growth in the children who
1. Carelessness with personal items
Not surprisingly, general irresponsibility in teens can
translate into financial irresponsibility, Kay says.
"If teens are constantly losing important personal items, such
as home or car keys, cell phones, backpacks or wallets, they might
not be ready for more money responsibility," says Kay. "If they are
careless with items nearest and dearest to them, they may also be
careless with a debit card."
2. Poor work ethic
Kay says that teens who have yet to pursue a job, whether
working for you around the house or at a real job, may lack an
appropriate respect for money.
"If teens don't want to earn money and don't know what it takes
to earn it, they won't manage it well either," says Kay.
In addition, you may be able to gauge your teen's work ethic by
how well he or she handles homework, grades or sports practices.
When teens want money, their work ethic may mature quickly.
3. A taste for instant gratification
If you notice that your teens spend every cent the minute they
get it (whether from a job or from an allowance), they are likely
not mature enough to handle a bank account or debit or credit card,
"If they want what they want and they are constantly asking for
more money from parents, they are not ready to manage their own
money," says Kay.
Ulzheimer adds that silly or immature purchases -- particularly
those made on a credit card -- are another sign of questionable
4. Can't or won't do the math
Kay says that if your teens do not possess the basic math skills
or patience to learn to balance a checkbook, then they are likely
not ready to handle most adult financial responsibilities.
"Managing money takes diligence and attention to detail, and
above all, math skills," says Kay. "These are important skills your
teen must acquire in order to manage their own money properly."
Improving your teen's money habits
If your teen displays one or more of the signs above, there is
As teens mature, their instincts toward money may improve. They
may suddenly become interested in getting a job, saving up for
something or making wiser buying decisions. You can help by
encouraging these signs of financial growth as much as
Kay suggests starting small by giving your teen a set amount of
money for a simple task, such as a school supply budget, monthly
entertainment budget or fall clothing budget, depending on what you
think they can handle. Talk with your teen about what needs to go
into that budget.
For example, their fall clothing budget might include shoes, but
no backpack or a jacket. Exposing your children to your planning
process can help them start building one of their own.
"Further, give your child the option to save any unused portion
of the budget to see if you can jump-start a desire to save money
in your child," says Kay.
Additionally, Ulzheimer recommends adding your teen as an
authorized user on your credit card (instead of co-signing for
their own account) to help them learn responsible credit
"It's like a credit card with training wheels," says Ulzheimer.
"If they make mistakes using a credit card on your account, you
will catch it before any serious debt racks up and correct the
Ulzheimer says this can help you stay engaged in the learning
process, help build credit in their name and monitor progress as
The blessing of mistakes
Whatever happens, don't give up on your teen. When teens make
money mistakes with their checking account or
, they may learn important lessons from the consequences, such as
the dangers of bank fees or returned items.
While teens will ultimately measure their progress in dollars
and cents, the peace that comes from knowing you helped improve
their financial habits may be priceless.