Helping teens find financial balance

Over the years I've talked with many parents who ask me how to get their 25 year-old son out of the house. They're ready to retire, take that two-week trip to Europe and enjoy life on their own. That's a tough situation. But life would have been so much easier if these parents had taught their kids responsible money habits at an early age. So how do we teach these skills before it's too late?

Following Your Lead

Remember your children are watching. When my oldest child was in preschool the teacher put her little feet in paint and then put the footprints on some matting. Under these precious prints she wrote, "I'm following in your footsteps." I kept that little plaque on my desk for years to remind me that they are watching.

There is a Native American saying: "Tell me, and I'll forget. Show me, and I may not remember. Involve me, and I'll understand." Our children are going to handle money the way we handle money, so the most important thing we can do is clean up our own act, show them what we are doing, and why we are doing it.

Teach Them Intentionally

There are four main areas of money that children need to learn: work, saving, spending wisely, and giving.

  • Work is how money is made, and there has to be an emotional and intellectual connection between work and money. I meet 50-year-olds who have never made this connection! Because this connection needs to be made, never use the word "allowance." Instead, pay "commissions." Life will not make "allowances" for you, but will pay you what you earn.
  • Saving includes controlling some of your circumstances and making wise decisions about big purchases since you don't want to teach your children to borrow money. (Really, you don't!)
    Goal setting is very important in saving. Try making a game out of wealth building or saving to buy something. Have your teen pick something for which they want to save. Once they have that goal in mind, encourage them to divide the price of the goal by the amount they plan to save each week. That will help them see how many weeks or months it takes to ring the bell.
  • Spending is one of the rewards of working and saving. It can be the celebration of a goal reached, and there's no doubt that spending is done differently when you're spending money you've earned. When spending occurs in this context, teens' self-esteem is maximized because they did it. There is a sense of accomplishment and of a job well done.
  • Giving is precious to watch when the kids are young, and fulfilling to watch as they grow into adulthood. Giving makes them less self-centered and creates a special depth of character within the life of your teenager. Those who never give become shallow, miserable adults.

You are teaching your children how to live well when you build their character and money management skills. Teach your children how to handle money now or they may come home and live with you forever. Trust me, the most powerful legacy you can leave is wise, competent children.

Dave Ramsey is a nationally recognized author and radio host. To find out more about his advice, seminars, and radio show, visit him on the Web at

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