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The Money Messenger -- Teen Money Management
August 05, 2010


Welcome to Issue #033 of The Money Messenger!

The Money Messenger brings you the latest on your kids and money.

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The Money Messenger

In This Issue

Back-to-school stuff seems to be everywhere! There are sales at every turn, and the school supplies greet you as soon as you walk through the door at Target and Wal-Mart. It sure looks like summer is winding down...

It also means that another school year is getting ready to start up. With that usually comes a change in routine - kids have to get up earlier, activities and fall sports kick in and family scheduling requires a dedicated project manager (or at least a BIG calendar!).

But, before we can worry about that too much, it's time for back-to-school shopping and helping teens with some basic money management tools for the coming year. Now is the time to start planning their budgets and what expenses they expect and will be responsible for. Doing it now - before all the demands of school and activities kick in - can save you lots of last-minute requests and debates.

Depending on your teen, you might want to use this issue along with July's newsletter on preteen money management. Combining ideas from both could be just the mix you and your teen need.

A reader's question on whether his teen is ready to handle a clothing budget for back-to-school wear

Helpful links and resources

What's new and what's next?

Note from Jennifer

We have safely arrived back in our hometown after two months away. I had the same mixed feelings I usually have when getting back to "real life" after a vacation. It is really nice to be back to familiar ground, seeing family and friends. On the other hand, I'm not looking forward to the humidity and the bugs that were wonderfully lacking in our tropical digs. You may have the same feelings when you come back from vacation - even if it's just an extended weekend at the lake.

Now, it's time to get into the groove for everyone going back to school. That alone can bring big changes. At our house, we have plenty of changes in store that are different from any past years. I am now working full-time from my house having moved on from my corporate life of over 20 years. Preteen princess has decided she wants more independence and is not going to an after-school program for the first time ever. Did I mention that hubby started a new job that requires global travel?

Your changes may not look like this but you probably have your own changes coming. Having a plan can make things a little smoother. This is especially true when it comes to teens and money management. Sitting down now to map out clothing, activity and other expenses can pay dividends as the first rush of school days (and demands for more money) kick in. The articles in this month's issue can help you do just that. Enjoy!

Feature Article
Teen Money Management: The Back-to-School Budget Dance

With school right around the corner, the list of things demanding money from your family budget is starting to grow. If you have teenagers, the price tags on some of those items can get pretty big (and the list can get long).

This can be a great opportunity to teach your teens about money - even if you haven't really done much up to this point. Keep it simple, and then it won't overwhelm them or you. This needs to be done together, so find some time that you and your teen can sit down and work on the details.

Remembering that this is a budget for a specific event (going to back to school) is key because it forces you not to get caught up in all the other stuff - and means that your teen can start right where they are in terms of what they know (or don't) about money. Use these quick tips to help you out even more.

  • Make a list of back-to-school expenses. It should be as complete as possible. Don't worry about who is paying for what just yet. Do include detailed descriptions to everyone knows exactly that item is. For example, it is better to have a line that says "2 pairs of jeans, 3 shirts and socks" than one that just says "clothes." And, if you think that you might pay for part and your teen for other items, put them on 2 lines. Don't forget to include registration fees, music or athletic costs and yearbook sign-ups.
  • Figure out the cost. For each line, put a dollar amount by it. You can also create 2 categories per line: one for your cost and one that your teen comes up with (you can do this even if you didn't create two lines for it in the first step). Don't worry about resolving the differences now - just get the dollars on there so you have a total for the back-to-school budget.
  • Review, cut and negotiate. Ahhh...the fun part. Some things are easy. Fees set by the school for activities, books and other items usually have fixed amounts. Some of these may be up for negotiation as to whether your teen participates, but if they do, the cost is pretty well known. Other items, clothes especially, are much trickier. Gain agreement on what items are included (how many pairs of jeans, etc.) first.

    Then, tackle how much each of you is willing to spend. If you are willing to put $50 towards a pair of tennis shoes, but your teen wants a pair that ring in at $75, they can pay the difference whether from a teen summer job or their teen allowance. Negotiating on what gets included and how much each party is willing to pay for is a key part of learning about budgeting as well as money management in general.

If you are not quite ready to tackle the entire back-to-school budget, why not try it on a smaller part? Clothing is an excellent place to start. It is usually important to the teen (even if they have to wear uniforms to school) so they have a vested interest in it. Plus, it can be a great way for them to learn more about online shopping - even if it is just for price comparisons.

Feature Article
Financial Planning for Teenagers

The start of the school year can be a great time to review the allowances, chores, plus any increased money responsibilities teens may have.

There are some basic areas to ensure are included in their financial planning and money education. You may have already got a head start on some of these - or this could be new territory completely. As with most things, take it slow, make adjustments as needed and keep moving forward. Your teen (and you!) will have made great progress by Christmas break. Consider teaching one new area each week or each month depending on your teen's money skills.

  • Saving and Investing. Why put this one first? It really is a skill that will pay dividends (no pun intended) into the future. It also applies to so many different financial areas. It will help them to build up an emergency fund. It can provide a way to buy big ticket items without having to go into debt. It also gives them money to invest, but get started on that savings habit first.
  • Managing Their Own Discretionary Spending. You may have read other advice suggesting that necessities should really be the first thing that teens learn to manage. The potential issue with that is that is hard to make mistakes and recover from them in this area. It is much less risky to make mistakes with discretionary spending. After they get the spending basics down here, they can start managing bigger and more important expenses. Discretionary items can include music downloads, movies, optional school activities and desired clothing.
  • Being Responsible for Necessities. After that, it's a matter of moving into more and more categories and even into their necessities. Of course, this can depend on how much money they earn or have to manage. If your teen is older and has a teen job, then they may be able to handle more responsibility.

A realistic financial plan for a teenager contains all of these elements. This will give them some freedom with their money while also providing structure. Plus, it will build the framework for responsible money management as an adult. Let me know your thoughts here on how your are handling teen money management lessons.

Ask the Editor!

Here's where I answer your questions. Paul is trying to figure out how ready his teen is to manage a clothing allowance. He really wants to have his 15-year-old son have a stake in how much gets spent, but worries that it may be too much responsibility. What is the right balance?

First, congratulations for even thinking about this step! It can be scary - for you and your son - but learning key money skills as a teen can really pay off for everyone in the long run. It's just getting over those first bumps that can a little intimidating.

There is really no one "right balance" since every family and every teen are unique. There is, however, a good spot for you and your son to agree upon when it comes to his responsibility. You may already have a good sense of how much he can handle, and you want him to take that next step.

Or, you may have no idea what he is really ready for. In either case, having some confidence in your final decision is key to making this work. Teens can smell fear in their parents - whether about money or anything else!

Ask yourself these questions to get a firm handle on where things stand now to help you figure out what your next steps are.

  • How much experience has your teen had handling money? This can be at any level in any category - saving, spending, earning. If they have very little experience, this doesn't mean that they can't have a clothing allowance. They will need likely more guidance and involvement from you.
  • What is your teen's money personality? Spender, saver, balanced? Knowing this will help you determine how much you need to be involved as well. If you have a spender who has plenty of money experience, they may still need a tighter rein than a saver who is new to a clothing allowance.
  • How much shopping experience have they had? This means comparison shopping to find the best price, watching weekly circulars for sales and even chatting up clerks in their favorite stores to get the scoop on upcoming sales.
  • How comfortable are they talking about money? This last piece is about confidence. Even if they don't know exactly how to manage a clothing budget, if they are comfortable talking about money and seeing it as a commodity, then they will be more willing to learn and ask questions. If they are freaked out about it, they may not be as likely to ask for help if they get in a bind (or start to go over budget).

Helping your son learn and participate at any level in his clothing budget for school is the right step. Knowing that along with your answers to these questions (and the tips from the first article) will give you a great foundation to succeed. Happy shopping!

If you have any other ideas for Paul, send them to me here and I'll share them with all the readers.

Useful Resources for You

While strives to provide all the information you need to help educate your kids, teens and family on money matters, there are other great resources to help you. This newer section of the newsletter highlights those that I've found that provide solid, understandable and usable information.

Back to school shopping and teen money management can make any parent a little anxious not to mention frustrated. These resources from around the web can help.

  • Office Max, Office Depot and Staples all offer solid school supply sales - including ones on pricey calculators teens can need for high school math classes. Plus, you can pick up cheap office supplies too!
  • Back-to-school season is a great time to buy a computer. Students heading into various grades need them (with the grades at which they need them getting lower each year). Lots of retailers offer specials, but before you buy, check out CNET's back-to-school computer reviews for desktops and laptops.
  • If you are a UPromise member, there are some sweet back-to-school deals that also earn you money for your teen's (or kid's) college savings account. You may need to buy the item through the online shopping at UPromise to get the full benefits.
  • State sales tax holidays are often at the beginning of August and offer no sales tax on certain back-to-school items within a certain dollar amount. For example, New Mexico offers it on clothing up to $100, computers up to $1,000 and school supplies up to $15. Check this list for your state as a start and then link over to get the details from your own state's site.

What's New?

Be sure to check out the latest blog posts at the site. With a new post nearly every day, there are lots of quick bits of information that might be just what you need including recent posts on teen money management.

If you are not a subscriber receiving the blog updates to your email each day, you can subscribe to the blog RSS feed here. Go now!

Coming soon...the next issue of The Money Messenger

I can't believe that next month's issue will be after the unofficial end of summer - US Labor Day. With fall just around the corner, it can be a good time to review allowances, chores and even the family budget. Join me next month for some unique ideas on how to make these easy to manage while still teaching kids about money. Make sure you and your friends have a subscription so you don't miss an issue!

If you have questions you'd like to see addressed for that issue, just use the Contact Form or email me at

Talk to you soon!

Comments or suggestions?

If you have any comments or suggestions for future newsletters, please let me know. I want to be sure that this newsletter meets your needs. Feel free to provide your comments using this contact form.

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