Teens live in the best of all worlds moneywise. Teen spending habits show that they spend a lot of money. However,  teens have few responsibilities or obligations for their spending habits.

What do teens buy?

The Piper Jaffray  25th semi-annual project “Taking Stock With Teens”  begins with an overview of teen spending by category.

Teens don’t have regular bills, debt, loans, insurance payments, and mortgages. Consequently, they can walk into the mall with a carefree attitude about spending. But is this a good way for them to prepare for adulthood, just around the corner? What is teen spending teaching them about money management?

What do teens expect to earn as adults?

We know many teens spend without much responsibility. Furthermore,  they also have an out-of-this world expectation of their earning as adults.

According to a 2007 Schwab Survey teenage boys expect to make an average of $174,000 annually, while girls expect to earn $114,000.

The reality is that in 2014 the median household income was $53,482 and per capita 12-month income was $28,555.

Why are teens so unrealistic about money?

In today’s society kids receive money at an early age. Usually they can spend it any way they want. As they grow they have more money but little responsibility for their expenses.

Over the years kids develop free-spending habits that will be difficult to break. The most critical years are those last few years before becoming a legal adult—the teen years.

One of your responsibilities as a parent is to guide your kids through a transition to the adult world of money. You can do this by creating a semi-independent stage for your teens. Consequently, they can  assume responsibility for more of their own day-to-day expenses, such as school, transportation, and education.

Make teen spending include real expenses

You can do this by using the strategy explained in The No-Cash Allowance. What you will be doing is transferring money that you would spend to your teen to manage. This includes keeping track in their accounts and paying for the expenses on time.

As a result your teen could manage funds in high school for most of their day-to-day spending. This can include clothing, entertainment, education, extra-curricular activities, and phone expenses. Such an approach prepares teens for adult spending responsibilities.

Even though you may be providing most or all of the funding the key is to transfer responsibility to your teen to manage the money certain personal expenses. In creating such a real-world money situation, The No-Cash Allowance provides a consistent process that teens can use to learn how to manage money for real-life expenses.

Lynne Finch helps parents teach their kids about money from piggy banks to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children that money is a number with kids as young as pre-school and continuing through high school. 

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