As a young man I struggled with the management of my finances. This was due in part to my father’s control and silence over the money I made from my neighborhood lawn-mowing gig. He would leave me with a couple dollars, take the bulk of the money I made, deposit it into a credit union account and that was that. No explanation and no conversation. And he almost dared me to suggest otherwise.
Then when I went to college he made a huge deposit into a checking account he set up for me. Pretty admirable…until I spent it all over the course of maybe two months. Then I moved on to the seductive lure of credit cards. There were signups everywhere I could see offering hundreds of dollars of credit for free! And I just had to have one of those Frisbees or squeegee bottles with some bank’s ugly logo on it. If I could go back in time I would slap myself silly for being so silly.
Understanding that these things can be cyclical (the sins of the father) I had a grand plan that I executed flawlessly. I was going to get my teenage son, a junior in high school, financially savvy by setting him up with a bank account and teaching him how to use it. In the fall of last year we marched into my bank and got him set up with a teen bank account, which is linked to my own. I would be able to manage it via computer and smart phone app. We set up an alert that would notify each of us when he had less than $25 in the bank and he’d get daily text messages of his daily balance. It doesn’t get any simpler than that, right?
Wrong.
My son immediately misinterpreted what a low balance meant, confusing “my balance is low; I need to spend more cautiously” with “Dad, I need more money.”
The first couple of times I let it slide. Then text messages began streaming in for cash for this and that at all hours of the day when he should have be listening to whichever teacher was standing in front of him. I went into his account and began to see what was happening. He is paid a weekly allowance, for various jobs and chores and just because, at the beginning of the week. I noticed huge, adult-sized meal purchases immediately after he got out of school. For instance, one Monday he spent $25 on pizza. On Wednesday he wanted money to buy a soda. Insert question mark here. When I questioned him he told me he took some friends out that he owed a favor. I very calmly explained to him that wasn’t what his weekly allowance””money that was there to help him get through the week””was for. Or he was welcome to do as he pleased, but then he would have to figure out how to manage if his money ran out until his next imbursement. Just like the rest of us.
When Things Fall Apart
Yes, I set him up with a tool to learn how to spend and track what he was spending. But I hadn’t sat down with him to show him, line by line what he should be looking to spend on a daily basis. Then I made an even bigger mistake: I gave his account information to my father-in-law. Soon random deposits of $60 and $75 were showing up in the account. The money was disappearing almost as fast as it was being deposited. Grandparents will be grandparents and there is nothing wrong with that. Except gift money has no place in teaching financial responsibility to a teen. I calmly and politely explained my position and I was told that my son is a teen and should be expected to make mistakes.
The issue was that my son wasn’t the one making the mistakes. He wasn’t even being allowed to learn from his mistakes, which is one of the biggest mistakes a parental figure can make when raising a child. My son or anyone, for that matter, spending without regard is a human condition. Him being given money at a moments notice to spend on anything and everything was in fact creating a handicap that I don’t want haunting him into his adult life. I had to remind everyone in the room my son has brown skin, in case they forgot. I need him to be ahead of the game and not two steps behind. This is, of course, just in case he doesn’t grow up to be a millionaire and even still, if he does.
The final straw came two weeks ago when despite my repeated requests to reign in my son’s spending he was given nearly $400 by various members of our family. The money was supposed to cover his spring break (while he visited my mother-in-law) through the beginning of his first week back to school. By Tuesday of last week, a mere eight days after being given the money his account had a balance of a whopping six bucks. I had to round up the group of adults again and explain the difference between empowering and enabling.
When working to get your teen responsibile about his or her finances:
- Have a clearly defined budget for your child based on his or her needs and wants. Even if they are working and making their own money. Make sure you sit down with your child and discuss this together so you are both on the same page.
- Make sure the other adults in the picture understand your goal of preparing your child to be financially responsible as an adult. Make sure they understand what you and your spouses want and if they don’t or won’t listen, do not give them access to your child’s account. Period. This is no easy feat, but the consequences are too high to do otherwise. Or you can suggest that the extra cash go to a savings account for your child.
- Most important, make sure you and your spouse are in agreement on the management of your teen’s finances. This may be the hardest part, but once you’re past this hurdle the rest of it will hopefully be a rather functional work in progress.
What have you done to prepare your man or woman in training to be responsible for his or her finances in the real world? Has it worked? If so, why? If not, why not?