How to Teach Teens About Money

It’s crucial for teenagers to develop financial literacy before they enter adulthood. As a parent, you likely already understand this and are taking steps to prepare your teen for financial independence. Here are four highly effective strategies that parents of my clients have used to teach their teens about money:

1. Teaching Teens About Money Through Incentivized Savings

Developing the habit of saving is a key financial skill. Some parents I’ve worked with have successfully encouraged their teens to save by offering incentives—whether by matching their savings or providing other rewards. This approach fosters collaboration between parents and teens in setting financial goals. This way, they can then create a plan and work together to achieve them. By guiding their adolescents through the entire savings process, parents help instill lifelong financial discipline.

2. Teaching Teens About Money by Showing the Value of Financial Decisions

Furthermore, encouraging teens to consider the value of their purchases and financial choices can make a lasting impact. This is vital when teaching teens about money. For instance, a 17-year-old client of mine realized he had a sense of entitlement and wanted to work on it. His parents helped him weigh the financial pros and cons of attending an out-of-state college versus a more affordable in-state option. After thorough research and discussions, he chose a school that was the best financial fit for his career goals rather than the most prestigious option. This experience taught him valuable lessons in financial responsibility and smart decision-making.

3. Encourage Teens to Pay for Their Wants

Teens often struggle to distinguish between wants and needs. Consequently, having them pay for their wants is very important when teaching teens about money. One teenage girl I worked with insisted she needed her own car. Instead of buying one for her, her mother encouraged her to save for it. After realizing how expensive cars are—especially when purchased with her own money—she became more content with driving the family’s older truck. Through this experience, she learned to prioritize practical features like fuel efficiency and maintenance costs over aesthetics. She also became more mindful about her spending habits and learned the value of hard work.

4. Support Teen Employment for Financial Growth

Moreover, encouraging (or even requiring) teens to get a job can have tremendous benefits. This makes it a key step in teaching teens about money. Aside from boosting self-esteem, working teens tend to be more responsible with money. They also get into less trouble and develop a greater appreciation for their parents. Many of my counseling clients who started working not only stopped asking their parents for money but also took pride in their ability to support themselves. They quickly learned to differentiate between needs and wants and developed a stronger work ethic.

Final Thoughts on Teaching Teens About Money

There are many ways to teach teens financial responsibility, such as budgeting, charitable giving, and learning the basics of investing. However, these four strategies are among the easiest to implement and provide an immediate, meaningful impact. At their core, they teach patience and delayed gratification—essential skills for lifelong financial success.

By guiding your teen toward financial independence, you’re not just teaching them about money. You’re preparing them for a successful future.

Helping teens grow and families strengthen their connection,
Lauren Goodman, MS, MFT