25 answers

How to Manage Teen's Finances

Hi everyone...I have a son who is 16 1/2. He has his own bank account. Up until now I have made him SAVE half of all money he earned for a job, got for birthdays, or even his child support (which I receive from his father). The other half is HIS to spend on movies, eating out or whatever. Well now he has a car and must pay insurance, gas, repairs...so my question is...I told him that the money in that account is for GAS or REPAIRS only...should I let him have the debit card all the time...or should he have to request access to his own account?
I feel like he should be responsible enough to handle this...but half of me is leary! any input would be great!

What can I do next?

So What Happened?™

Hi everyone!
Thanks so much for your GREAT responses! I have taken a little bit from each and everyone and blended them together for the ultimate answer! We have decided to open a savings account and he will now deposit 25% of any birthday, child support, paychecks into it! Then the other 75% goes into checking from which he will have gas money, insurance money and spending money. He will hold onto his debit card and we will review his receipts and checkbook weekly as well as when statements come in. This week he got a taste of the REAL world when he had to drop 250.00 on his car for repairs...he actually paid for his own haircut and purchased himself some clothing this week. So I really really want to thank all you super Moms and Grandmoms out there for your superb advice! Have a great weekend!

Featured Answers

My approach is to let my 17 y.o. daughter use her debit card and manage her account, while trying to keep an eye on the bank statements, so as to be safe...

1 mom found this helpful

Do you have on-line access to his account? This will allow you to provide him the opportunity to make responsible decisions. You can pull it away if you see him making poor financial choices.

1 mom found this helpful

I have only a 5 year old and a baby...so I'm not experienced with teenagers. But I think you should give him the card all the time. You should be able to see the account online and will know if he is spending it where he shouldn't. It will teach him responsiblity. In only two short years he'll be an adult...plus it'll be good for him to have the card in case of emergencies.

Just my two cents. Good luck!

1 mom found this helpful

More Answers

Hi,

Have him put the money that he is saving in a Money Market account that isn't as easily accessible by a Debit card. He can transfer the money online into his debit card account as needed for those car needs. This can help to restrict his use of the money. There are some great online banks for this. Plus, he can gain between 3% and 5% interest on the money he is saving!
I have a financial coaching business. Feel free to contact me if you need any advice about yours or your son's financial needs. I am listed on the website!

1 mom found this helpful

Personally I think he should have to request it....sometimes kids dont understand the amount they have and think its like a credit card...you would hate to be stuck with overdraft fees. But it all depends on you and your childs communication. Maybe you can let him have it but the firdt time he messes up then take it. Good job on teaching him to save at an early age.

1 mom found this helpful

Do you have on-line access to his account? This will allow you to provide him the opportunity to make responsible decisions. You can pull it away if you see him making poor financial choices.

1 mom found this helpful

My college age son, went away to college spent of all his money before Christmas , his years worth of funding gone. I learned later this was not un common. I spoke with a financial planner, who explained that Parents want to get mad at the child, when in fact, we give them access without a plan, and they have no real experience. Having access means defining a plan for them to follow. How else would they know.
I should have told my son, for example. YOu have 1200.00, that means you can allow yourself, 100.00 per month, or 25.00 per week, if you stray from that your funds will not make it a year...
Not any different than adults seeking financial planning.
It is their first time, they need to have the plan spelled out for them. Do not assume it makes sense to them...

And they may fail a few times, but you need to keep teaching them....

1 mom found this helpful

I have only a 5 year old and a baby...so I'm not experienced with teenagers. But I think you should give him the card all the time. You should be able to see the account online and will know if he is spending it where he shouldn't. It will teach him responsiblity. In only two short years he'll be an adult...plus it'll be good for him to have the card in case of emergencies.

Just my two cents. Good luck!

1 mom found this helpful

I would recommend that you do two things - teach him to budget - and teach him how to STILL save -a difficult task I know!

I would open a money market account, and help him map out how much money he gets a month, and what that translate to each week. Then let's say he has $100 a week, and needs $50 a week for car insurance and gas. Tell him from whatever remains of necessary expenses, he should save 25%-50% (depending on how much he really has - no need whittling him down to $1 in spending money!) Put that in the money market, and then the rest in the checking account. Then, once a week, and then after a month or 2 go to every two weeks, sit down with him to review his online bank statement to make sure that he spending only the amount he budgeted for himeself.

Then explain to him that if he has a week he CAN"T work, and is down on money, his first step is to take money from his discretionary spending, and in an emergency, with your permission, he can make a withdrawl for the money market account. Plus, he can use a portion of that for dream purchases (the radio he has to have for that car, etc!)
Perhaps he can be encouraged by you matching a donation of $0.50 for every dollar he puts in the money market or something like that.

In that way, you can give him the debit card, let him use it pretty freely, giving him some rope to run on, plus some oversight on a schduled basis, that way he can look forward to your scheduled financial updates, and not feel like you are constantly questioning his purchases. On top of that, if he uses more money than he has in his account, and has accidently went into his budgeted money for necessary expenses, you can make him take a "loan" from his money market account, and pay it back by a certain date, with interest, so he learns how that works. He will therefore also see his dream item money get drained.

Yikes - this may have been confusing, but I think by making him him commit to saving a certain amount, no matter what, and rewarding him for that by matching at same level, and then learning to live on the rest, he will learn that saving is #1, and to only buy what he can afford with the rest of his income. Too many in America buy what they can afford, and then try to find some way to save what little they have left, instead of saving first, and then buying what they can affort on what is left. Especially the young with money burning a hole in their pocket!

1 mom found this helpful

maybe you could try getting him one of those cards that you fill every month with a designated amount and see how he does with that first. this way he can't take out too much inone month that he regrets it later. then month after month he will realize how far the money went and see what he has left over. and you can too.

1 mom found this helpful

Hi T.. I bank at Chevy Chase and my daughter also has an account there. I was able to put a limit on how much she can withdraw from her account, even with her atm card. You should see if you bank offers a similar option. You should also give him the chance to prove he can be responsible. I think sometimes we assume the worst of our children, he might surprise you and be an "adult" about his money management. Good Luck!

1 mom found this helpful

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