Financial literacy is a crucial skill that kids should master as early as possible and it’s particularly important for teenagers as they begin to navigate their own financial responsibilities. As a parent, it can be a minefield guiding your child towards financial independence (we know!). Here we provide insights into how much money a teenager should have, considering factors such as their age, responsibilities and their expenses. By empowering teenagers with financial knowledge and the tools they need, we can help them make informed financial decisions and build a healthy relationship with money.
When determining how much money a teenager should have, their age and responsibilities is an important consideration. Younger teens will have fewer financial goals than older teenagers which might include occasional sweet treats and outings with friends. Older teenagers tend to have more responsibilities such as transport costs, buying their own toiletries and hopefully, saving money for the future. If you’re giving your teen an allowance, you’ll need to assess what they are spending on before deciding how much to give them.
If you are giving your teen “pocket money”, you’ll also need to consider what your expectations are. Are you providing an allowance to cover most of your teen’s expenses? Or are you expecting them to earn their allowance by completing chores at home? The approach you take may have an influence on how much you give them as you may decide to give them a basic allowance but allow them to earn more by contributing at home.
The amount of money you give to your teenager may also depend on where you live as the cost of living can fluctuate significantly depending on location. For example, if you live in a rural area, transportation costs will be much higher so you’ll need to take that into account when determining how much money to give your teen.
You need a good understanding of what your teenager’s expenses are to help you determine how much money they should have. You should agree with them what you are willing to pay for and what you expect them to pay for themselves. Giving teenagers some financial responsibility teaches them how to budget effectively. Some common expenses for teenagers might include:
We’ve said it before and we’ll say it again: You have a saving should be a part of everyone’s budget. Teaching your kids to and how to save money really should be a priority as it sets them up for the future. You should discuss the importance of saving with your teen and agree with them an amount that you expect them to save each month. You can then take this into account when deciding how much to give them.
Whatever amount you agree, make sure they understand the importance of setting money aside to manage unexpected expenses. Support them to open a savings account so that savings stay as just that!
Whether or not you give your teenager an allowance or expect them to earn it, they may have other sources of income such as a part-time job or opportunities such as baby-sitting. Depending on how much they earn from these other sources may influence how much you decide to give them.
Every family situation is unique and different which is why we haven’t talked about actual amounts of money. However, we hope the advice we’ve outlined enables you to decide how much to give your teen and equip them with the knowledge they’ll need to make sound financial decisions in the future.