Teens & Money: Teaching teenagers to shop smarter

I recently sat down with a 14-year old who had just started at a new school. Lucy Brewster had a number of financial questions and wanted to talk to a financial advisor about spending and saving.

First, Lucy wanted some advice on how to ask her parents for money for shopping for some new clothes. As I talked with her, it became clear that she really wanted to participate in shopping with her friends. For her, shopping was both social and a way to exercise her independence. She understood that her parents were concerned about wasting money on unnecessary clothes.

I told her to use her desire to shop as an opportunity to convince her parents that she is ready to handle some basic financial matters on her own.

I suggested she start by making a list of the clothing items she needs for this fall. She should estimate the cost for each item, then total up the list. Don't go overboard; about seven items seems reasonable. Then she should ask her parents to give her the money to buy all the things on the list and let her shop for them independently at her favorite stores.

The family should agree on two simple ground rules: All items on the list must be purchased, and, if Lucy wants something that's not on the list, she shouldn't use the money her parents gave her to buy it.

As an additional incentive to save money, I suggested they strike this deal: Agree that Lucy will look for sales and coupons. If she buys all the items on the list, some or all of the money leftover is hers to keep.

Likewise, if she blows any of the money her parents gave her on other items, there should be consequences. Consider something like having to spend the next weekend doing extra yard work or housecleaning to make it up.

Some parents ask if they should require their kids to use their own money for school supplies and clothes. This is totally a personal decision. But if you think about it, requiring your teen to make some contribution towards school costs is something most parents do when their student goes to college. So setting the stage for this arrangement in high school seems like a good and reasonable idea.

Again, there are no set rules here, so do what works best for your household.