Part 3: How to Talk to Kids about Money (ages 12-18)

Part 3: How To Talk To Teens about Money | www.TheHeavyPurse.comThere are some things we can tell our kids once (okay, maybe twice) and they understand it. And then their other topics, like money, where the lessons need to be ongoing. I already shared with you how to talk to kids about money, ages 0-7 and 7-12 and today we’re going to focus on teenagers.

Important Money Lessons for Kids, ages 12-18

I have had the privilege of speaking to many high school seniors about money. Despite their actual interest in the topic—it was clear to me that money was not discussed in the home, nor had they been actively taught how to handle money. They were eager for someone to answer their questions because they all were smart enough to recognize the role money would play in their life. Don’t leave it to chance and hope your kids will make smart choices on their own.

Money is Emotional

This is one of the first lessons my father taught me. He knew our emotions drove many of our spending habits. And let’s face it—teenagers are known for their heightened emotions, so the sooner you can help them understand how their emotions affect their money decisions—the better off they will be.

The best way to teach them is to demonstrate it. Pick out something you want at the store and tell them “why” you want it. You had a tough day at work; you got into an argument with a friend; you’re tired and need a pick me up. Now remind them how emotions can cause us to spend money recklessly so that’s why you set goals. And even though you feel—mad, sad, glad or bored—you are not going to buy whatever caught your eye. Your goals matter more than any temporary satisfaction this item will bring. Do this regularly.

Success Tip: Make sure your kids continue to set goals. Once they achieve a goal, celebrate then set another goal. Goals are your best defense against emotional spending. It’s easy to spend money when it has no designated purpose, but when it impacts achieving your goal, now you have a reason to not spend your money.

Don’t Play Keep Up with the Joneses

Advertisers also bombard teens with messages that they absolutely must have this or otherwise they are missing out. Don’t dismiss their feelings because that just makes them think they can’t talk to you. Instead, share with them a time when you tried to keep up with the Joneses and the outcome. Yes, this is the time to bring out a few of your money skeletons. Let them see what they are feeling is normal but keeping up with the Joneses creates a whole new set of problems. The better choice is to figure out what you want and work towards achieving it.

Success Tip: Have your children figure out the one item they really want and find a way to earn money to buy it themselves. Not only is this a good experience for them but also helps them correlate hard work with earning money for things they truly want.

Don’t Abuse Credit Cards; They are a Tool

While we aren’t to this point yet, I plan to open a checking account and give the girls a credit card, even if it’s a prepaid card funded by me, when they turn 13. The girls already know credit cards are not free money, but it is still different when you actually have your own credit card and the ability to spend money you don’t have. I want them to experience this while I still have a bit of control and any mistakes they make won’t carry the same weight if they were on their own.

Success Tip: We all know the dangers of credit card abuse, but at the same time don’t make your kids fear them or think someone is bad for using them. This is not true. The mistake that happens is most people don’t understand the risk associated with carrying credit card debt and the impact it can have on their financial well-being. This is what you need to teach them.

Introduce Investing

While I don’t think you need to go into the nitty gritty details of investments and the stock market, you do want them to become familiar with a few terms and concepts and most importantly—understand it is something they will need to do.

I’ve already explained compound interest to Lauren and she regularly confirms with me that we pay off our credit card bill every month so “we don’t waste family money on interest charges”. Explain to your kids when compound interest benefits you, investing and savings, and hurts you, credit card interest charges. We’ve also hypothetically invested in companies so she could experience market volatility but also see the potential of investing.

Success Tip: One of the biggest regrets I see is people wish they would have started investing when they were younger. Take your kids through some exercises showing them the cost of waiting to invest. With older kids, you may want to talk to them about a 401k, so instead of tossing that paperwork aside when they get their first job out of college, they instead fill out the paperwork and start investing.

Avoid Unnecessary Debt

This has already been alluded to in many of the other lessons but make it crystal clear to your kids at this age that debt should not be considered commonplace. Walk them through when it may be appropriate to leverage debt, such as attending college, buying a home or starting a business, but to also understand that all debt has risk and to carefully consider the risks before taking out a loan. It’s important to teach your kids how to think about debt, so they know when to leverage it or avoid it.

I hope these guides have been helpful to you and make starting these important conversations with your kids, whatever their age may be, a little bit easier for you.
In case you missed them, here are more How To Guides: Tips to Talk to Your Kids about Money (ages 7-12) and Tips on How to Talk to Your Kids about Money (ages 0-7).


The Heavy Purse Store is now open! My new downloadable Money Club Workbooks are now on sale. Each workbook provides five targeted lessons to help you grow Financially Confident Kids. Please check them out in The Heavy Purse Store.

September 16, 2013  •  35 Comments  •  Tips

Leave a Comment


  1. Monday, September 16th, 2013
    Love this Shannon! I've found the high school students I teach in personal finance class really get into the investing material. We usually play a stock market challenge where they invest play money and monitor their stocks over the course of several months. It's a great way to teach them about the market and get them thinking about appropriate ways to build long term wealth. Some of them have actually done quite well.
    • Monday, September 16th, 2013
      Kids really want to master money as they realize the significance it will play in their lives. It's great that you have your students invest and become familiar with the stock market. They will definitely be much more inclined to invest once they are on their own and feel more confident doing so.
  2. Monday, September 16th, 2013
    I like the points here about being real with your kids so they can see that these things can be hard even for their parents. It's not a weakness to want certain things in the moment, but it's a strength to recognize them for what they are and be able to move past them. Kids this age are definitely smart enough to understand some of the complexities there and I think will really appreciate the realness.
    • Monday, September 16th, 2013
      Thanks, Matt! I think it's so important to be real with our kids. They usually know when we're not walking the walk, so to speak. Plus, if we pretend that we don't "want" things, then they may wonder what's wrong with them for still wanting things. This is how they develop money hang-ups. I'd much rather show the girls that I still find things I want but choose to honor my girls.
  3. Monday, September 16th, 2013
    Great post Shannon! I like how you really make it practical and give ways to use/exercise what is being taught. I think that's a great way to help get many started - especially if they've been given a solid foundation from the beginning.
    • Monday, September 16th, 2013
      Thanks, John! That's definitely my goal with the girls - to give them a solid foundation to work from when they are their own. It definitely makes a different in their lives.
  4. Monday, September 16th, 2013
    Great post! I think this is a great age to teach kids that it's not all about Keeping up with the Joneses. It is so tempting at that age.
    • Monday, September 16th, 2013
      Thanks, Michelle! I agree the teen years are where the Keeping Up with the Joneses really takes hold. If we don't show them another way, then they spend much of their lives comparing themselves to others, rather than focusing on what is that they truly want for themselves and their family.
  5. Monday, September 16th, 2013
    I think that's a great idea to give them a cc when they enter their teen years - I agree it gives kids autonomy to experience actually having one, but on a smaller scale. That's great Lauren's already picked up on the evils of cc interest charges, as well. Great tips, Shannon!
    • Monday, September 16th, 2013
      I really want the girls to experience credit cards with me guiding them before they leave home. It's easy to say that you won't buy things you can't afford, but sometimes actually following through is harder than you think. I want my girls to go college feeling really confident that they can use their credit cards wisely. :)
  6. Corina Ramos
    Monday, September 16th, 2013
    Thanks for the success tips Shannon.

    I won't be giving out a credit card for another couple years when Marisa goes off to college but I was thinking along the lines of a debit card because I'm afraid she might get a little crazy with a card being in a new dorm and all. You know how easy it is to get caught up in all the excitement of a new place away from home and wanting to spruce it up :).

    When my son brought home his employee packet we talked about the 401K program. He was too funny thinking it was only for married folks but I explained how it works and he enrolled in it. :)

    All in all I'm trying my best to give advice I didn't get so they don't make the same financial mistakes I did.

    Great post Shannon! Hope you're off to a great start of the week! Happy Monday!
    • Monday, September 16th, 2013
      Thanks, Corina! That's fabulous that you son enrolled in his 401k. It will make a huge difference starting so young. And it's no surprise he thought it was for married people. :) Oh, it's very easy to go a little crazy with credit cards. It's fun to gratifying our wants instantly and no one to tell them "no". You have a great week too!
  7. Monday, September 16th, 2013
    Some more great ideas. I don't know if I would let my daughter have a credit card or not, but maybe that is the best way to go so she can learn how they work. I had no clue when I signed up for my first one.
    • Monday, September 16th, 2013
      Thanks, Kim! So many college students sign up for credit cards without really understanding them, which is I do want the girls to have them beforehand. Not every parent may feel comfortable doing so, but for me, it's actually more comforting knowing that I have some control and ability to oversee their choices.
  8. Monday, September 16th, 2013
    Oh boy, this is such an important age demographic when it comes to learning about money. I'd say the single biggest impact for me was getting my first job at age 16 at Pizza Hut. I learned how hard you have to work to get money, as well as the freedom and options it can provide you.
    • Monday, September 16th, 2013
      I agree, DC. Teens are really need to understand money at this age and a job is great way for them to get some hands-on experience. When they see the benefits of their hard work, it makes them want to work harder and make good decisions with what their hard work reaped.
  9. Tuesday, September 17th, 2013
    Bookmarking all the posts in this series! I knew nothing about managing money until I graduated college. I lucked out that I learned to save and invest in my early 20s but I want my children to have a solid foundation of financial education long before that.
    • Tuesday, September 17th, 2013
      Thanks, Stefanie! So many kids don't have basic money knowledge when they leave home and learn by trial and error, which can be quite costly! :) It's great that you want to make sure your kids have a strong financial foundation before they leave home.
  10. Tuesday, September 17th, 2013
    Money is emotional, and I learned that at a young age However, I also learned to shop when emotional, and that landed me in debt! Glad I don't do that anymore :)
    • Tuesday, September 17th, 2013
      So true, Mackenzie! Many of learn to drown our sorrows or reward our successes through buying something. I'm so glad you don't do that now either! :)
  11. Tuesday, September 17th, 2013
    I seriously love this series you have! I also try to emphasize that people spend money on different things - you usually can't have it all. Decide on what you want, don't judge others on what they want and stay focussed on your own goals.
    • Tuesday, September 17th, 2013
      Thank you, Leah! I appreciate your kind words! Great point too. We should not judge how other people choose to use their money. As you say, stay focused on what you truly want and work hard to achieve it.
  12. Tuesday, September 17th, 2013
    My daughter is only 6 year old but she is already aware that it's not easy to earn a money. She is different from other kiddos, she doesn't buy unnecessary things. As a matter of fact she already knows how to budget and told me that we need to save for the future! :)
    • Wednesday, September 18th, 2013
      That's fantastic Clarisse! Some kids get it very quickly and can be our role models! :) She's well on her way to being a Money Smart adult.
  13. Wednesday, September 18th, 2013
    More great tips, Shannon. We are using these tips ourselves with our almost 14-year-old, and they're working wonderfully! Case in point: She's been eyeing a Sony Vegas Pro (computer program) which sells for somewhere in the $500 range. Out of reach for her, given her current savings and our current debt situation. After months of hemming and hawing over how to get this, she took it upon herself to find a cheaper price on Ebay: $255! With birthday monies and a bit of help from us, she got her Sony Vegas, but it wouldn't have been possible without her understanding the importance of the rules above.
    • Wednesday, September 18th, 2013
      I love how money savvy your kids are becoming. When they find things they want, they don't feel defeated if they don't readily have the money. They look around and find great bargains. Wonderful habits to instill in kids now and will definitely help them when they are adults too. LOVE it!
  14. Wednesday, September 18th, 2013
    Everything my parents said from 12 to 18 started by "when you are 18 and we stop paying for your stuff" haha. They still covered the basics but if I wanted better brands I had to pay for the difference.
    • Thursday, September 19th, 2013
      LOL! Well, at least you without a doubt that you'd would need to financially on your own at 18. Some parents have a tough time cutting the purse strings. :)
  15. Friday, September 20th, 2013
    Love the advice about not keeping up with the Joneses. I already see this happening with my 12 year old. I am constantly talking to him about "stuff" not bringing happiness. I like the idea of picking 1 item and saving money towards buying that item.
    • Sunday, September 22nd, 2013
      Thanks, Kyle! Teens are very susceptible to the "Keeping Up with Joneses" mindset and without being taught that "stuff" doesn't bring happiness, they continue to believe that as adults too. I don't want the girls to feel bad for "wanting" something, but I want them to take the time to figure out what they truly want, then save for it. It's great that you're teaching your son to figure out what he wants, rather than follow the crowd.
  16. Saturday, September 21st, 2013
    I'm so excited that THEY were excited about it, and so glad they had you there to answer questions! There is hope for tomorrow!
    • Sunday, September 22nd, 2013
      Thanks! It always surprises me how engaged and interested kids are when we start talking about money. They have so many questions and are so hungry for knowledge. I'm happy to answer their questions but it makes me sad that their parents aren't talking to them.
  17. Wednesday, September 17th, 2014
    This is a great post, Shannon. I only hope parents get the chance to read it because they are the ones who influence our spending habits more than anything.
  • Meet Shannon

    "As a Certified Financial Planner, it is my passion to help individuals and families build a healthy relationship with money. I look forward to helping you raise financially confident kids.” - Shannon Ryan