Children and teens are increasingly aware at a younger age just how much they think they are missing. Now considered a target market by major companies, they too are being bombarded by ads and offers for anything from clothes, to cell phone ring tones, to video games, even food.

With so many brands, retail stores and restaurants competing for your children's attention (and dollar), it is not only important to teach them early on how to save and budget (see the budgeting-help.com article "Budgeting for Children and Teens"), but also how to wisely use the money they eventually earn.

As it is, most teens do save their earnings---for specific goods they want to purchase. Only 22% save money for college and future goals, while over a third only save for items they will eventually buy. Another 27% save with no specific purpose. Considering loans make up most college financing options, assisting children and teens in making appropriate choices with the money they earn may be able to curtail their spending and attribute more of their earnings toward saving or make decisions with their money so that they can benefit in the long term.

Parents can start with an allowance to practice budgeting and savings. The Credit Union National Association (CUNA) notes that this will give them money management experience. Additionally, they also perform small jobs or chores around the house for additional income to be exposed to earning wages for work.

At or around ages 11 to 14, CUNA suggests encouraging young teens to "branch out" and take odd jobs like babysitting, yard work or pet care. They can learn early on how to balance time between school and work while continuing to manage money. If not already done so, young teens should be exposed to some concepts of budgeting---whether that means traveling along on shopping trips or reviewing bills and receipts to understand the expenses of daily life, setting up savings accounts, or creating a list of expenses and earnings.

Now that they have had at least two opportunities to obtain or earn money, they should also learn the concept of saving as a form of "paying themselves first". Money scholars, financial institutions and consumer groups suggest telling children to put at least 10% of all earnings and income (whether babysitting wages or cash gifts on a birthday) away for general savings. More specific savings goals can be made once they are in the habit of immediately putting away 10% (see "Financial Futures Start Early" for more information on savings plans for children and teens).

When they take on their first formal job, whether it is in high school or during college, they should know how to time and money manage their new line of work. With the added income and the previous exposure to concepts of savings and expenses, they may be able to allocate their money more wisely.

References

National Consumer League. Teens Spend Money, Want Credit, Need Education
Money Wi$e. Talking to Teens About Money.
Space Coast Credit Union. Raising Money-Savvy Kids.
Jannelle A. Williams. Passing on the Wisdom of Wealth.