Youth fads come and go, but one trend remains the same: Teens love spending money. According to a recent study, kids ages 12 to 17 on average spend $46 a week -- that’s $2,392 annually -- yet most have no sense of personal finance. "It's essential to teach kids about money management now, to protect them from a future of unchecked spending and debt," says Linda Sherry, a spokesperson for Consumer Action in Washington, D.C.
First, you need to create a budget with your kid. Discuss his various expenses and let him know what you're willing to pay for. Determine an appropriate allowance -- teens need pocket money to understand the consequences of their spending decisions. Make it clear that there will be no cash advances, and set boundaries. "If a purchase violates your values, it's your responsibility to say, 'You may not buy clothing with offensive language,'" says Janet Bodnar, author of Raising Money Smart Kids (Kaplan). Once the ground rules are set, step back and let your teen test his buying power.Where Do Teens Get Their Money?
Parents: 54 percent
Gifts: 35 percent
Allowance: 22 percent
Household jobs: 30 percent
Part-time jobs: 27 percent
Full-time jobs: 8 percent
Source: Main income sources for 12- to 19-year-olds from Teenage Research Unlimited, Northbrook, Illinois. (Figures don't add up to 100 percent because respondents could choose more than one category.)