Joanna Fortune: Our teen burns through money — how do we help her to manage it? 

Just giving our children money doesn’t teach them about financial responsibility, but it can be a great way to start the process.

Our teenage daughter burns through money at a rate that is hard to keep up with.
She’s 13, and if she receives any money for her birthday or Christmas, she typically has it spent by the end of the week. It’s not even a case that she would be saving for a particular item or had planned to spend the money on some clothes or an activity. It’s like she feels she has to spend it immediately and will impulsively buy whatever gadget or fad everyone is into at that time.
She often regrets spending her money so quickly. We recently started giving her some lunch money on a Monday to take her through the week. We give her lunch every day, so this is more to pick up a snack when some of the students go to the shop together at lunchtime. We thought it would help her better understand budgeting, but the money is gone by Tuesday, and then she feels guilty about how she spent it.
How can we support her?

I imagine a lot of parents can relate to your question, and you raise an important point about teenagers and money.

Just giving our children money doesn’t teach them about financial responsibility, but it can be a great way to start teaching them.

Whatever about the money she receives as a birthday or Christmas gift, the money you give her at the start of the week is a great starting point. She is showing you that she is struggling to budget across five days, and rather than her feeling bad about the money being gone, use it as a teaching moment.

When the money is spent on a Monday, then the natural consequence is no snack budget for the rest of the week, but start a budget with her ahead of the following week so that she is prepared. Identify the snack she likes to buy each day, have her cost it, and work out how much of her allowance has to be held back each day to have enough to last until the end of the week.

You are explaining clearly that she has “enough” to cover her snacks, but if she overspends on any day, she will run out before the week is done. This will be her choice and her responsibility to manage. She will likely get it wrong before she gets it right.

I think pocket money is a great way to develop financial responsibility. Just ensure that the amount you give is enough to cover what you expect them to buy themselves. For example, if she must buy her own toiletries or cover her phone cost (if she has one), then the amount you give her should cover that.

If you are giving more casual spending money, sit with her before you hand her the pocket money and ask her to think about any cinema plans or any friend who has a birthday in the next few weeks/month.

Teach her how to save a percentage of her pocket money weekly so that she has enough saved when an event like this comes along and she can buy a friend a gift or go out for a fun outing with friends. You could structure this as she saves 10-20% of the amount and can spend the rest.

But once her pocket money is gone, it is gone. She has to learn that there isn’t an endless flow of money and that money is earned and must cover practical as well as whimsical things.

To this end, I wonder if she has chores she must do at home? Connecting chores with pocket money is an effective way to teach the concept of money being “earned”, not just given. Some chores she should not be paid for as part of being in a family are those that everyone helps out with, but you can assign additional tasks that she can do to earn her pocket money. Again, bring in some cause-and-effect thinking here because if she doesn’t complete the task, she doesn’t get the money.

Approach this in a calm way; you want to avoid shaming or scolding her for not being responsible with money and instead take a more collaborative approach of working together to learn a new skill.

Children are never too young to start learning this lesson about money and some (developmentally appropriate) financial responsibility, and as she is 13 years old, I would urge you to start teaching her now.