10 teenager money tips to set them up financially for life

Fast changes in the financial world are piling more pressure on teenagers, but these experts’ tips can help them excel with money.

Teenagers have enough pressure on their plates with studies, careers and relationships, plus a painful pandemic thrown into the mix.

Money worries are the last thing they need, and parents and grandparents play a huge role in helping to shape teens’ financial futures.

Covid-19 has accelerated cash’s disappearing act, removing the emotional impact of physically handing over money, and has also caused havoc in many of the industries where teens have part-time jobs.

MyBudget director Tammy Barton says teens are spending more money online shopping, ride sharing and fast food deliveries, at a time when record-low interest rates mean they get almost no interest on their savings.

“It is becoming even more important to show how money is earned, saved and spent and it’s not just all done with a swipe of a card,” she says.

Financial planner Amanda Thompson worries that the buy now, pay later trend will be damaging for older teens.

Financial planner Amanda Thompson with daughter Bella, 18. Picture:Supplied

Explaining the dangers of easy credit and tap and go is vital, and here are another 10 crucial tips from money specialists.

1 TIME TO TALK

Thompson, who has two daughters aged 18 and 16, says parents should “break the generational cycle of money taboo” after many grew up in households where finances were not discussed.

“Teens can spot a hypocrite so make sure you are leading by example when spending money and saving,” she says. “I try as best I can to be open with my girls about money.”

2 WORK BRINGS REWARDS

Hard work is the route to wealth for most people, Thompson says, and parents should explain that nothing comes for free.

“By the time they are teens, most kids have been earning an allowance through chores at home. Make the accountable for the job … no chores, no pay.”

3 EXPLAIN HOUSEHOLD FINANCES

Thompson says involving teens in household finances can start with getting them to do the shopping, which increases the awareness of what things cost.

Barton says teens can use online marketplaces to sell clothes they no longer wear, developing confidence and entrepreneurship.

4 WRITE DOWN GOALS

Without written goals people can wander aimlessly through life, and the same applies to money. Goals give teens an early road map to help shape their life.

“Find something for your child to save for, like a car, a bike, a new outfit or a new phone,” Barton says.

5 THE 10 PER CENT RULE

“Encourage kids to put aside 10 per cent of pocket money or wages on a regular basis towards savings goals,” Barton says.

“This teaches discipline and delayed gratification instead of spending money all at once.”

6 LEARN THE GIFT OF GIVING

Barton, who has three children aged between seven and 18, says money skills are about more than just saving and spending.

“Encourage kids to find a cause to donate some of their money to,” she says. “The attitude of gratitude brings joy, happiness, social connection and increased self-esteem.”

7 NEEDS V WANTS

Encourage teenagers to consider the difference between wanting something and actually needing something, Barton says.

“Do you need it? Do you need it right now? Or do you just want it?”

MyBudget director Tammy Barton with her husband Nathan and her children Seth, 16, Madison, 18, and Ellie, 7. Picture: Supplied

8 BUY THE INDEX

Investment is a key to growing wealth, and teens don’t need to be an immediate expert. Show them exchange-traded funds that spread every dollar over a wide index of stocks in Australia and overseas – including teen favourites such as Apple and Netflix.

Barton says she has recently started talking with her teens about investing in ETFs.

9 MATCH THEIR SAVINGS

Whether teens are putting money into investments or towards a big purchase, parents can turbocharge the growth by matching it dollar-for-dollar.

Thompson did this when her eldest daughter started driving and wanted to save for a car. “I matched everything she saved which was a good incentive for her to save more,” she says.

10 ADULT ACTION

Superannuation, insurance and government services are important to understand, so help them with this.

“Recently, I’ve sat with my 18-year-old and linked ATO to myGov and helped her complete her first tax return,” Thompson says.

“I also encouraged her to download a petrol app and talk through the pros and cons of distance to travel to buy cheaper petrol.”