MCU: StartPoint (sm) Parents' Guide

Does this sound familiar? Every time your teen wants to go out somewhere or do something, they are asking you for money. You tell them, "I already give you an allowance. Where does all this money go?" But in the end you give them the cash they asked for and your wallet ends up empty. What can you do to teach your teen some money management skills?

You need to teach them to budget their finances. To do this you need to create a situation where they control what they spend and allow them to make mistakes and learn from them. The first step in this is to actually give them more money with no strings attached. You will know how much to give them by keeping a journal for a month. Keep track of all the money you give your teen for discretionary spending on items like CDs, clothes, movies, video games etc. during the month. Required items such as school lunches etc. are not included in this total.

When you have your total for the month, come to MCU and set up a StartPoint^(sm) account for your teen. Deposit 75% of the monthly total you came up with into your teen's account. Then, turn over the account to your teen and let them know they will need to pay for all the discretionary items themselves out of their account. Your teen gets more freedom to choose, and will like the idea of not having to ask you every time they need some money.

Then you need to set some ground rules. You let your teen know that you will not "advance" them any part of the next month's allowance. If it is really important for them to get some additional money ahead of time, set this up as a short-term loan. You will give them the money they need, but out of their next month's allowance you take back the loan amount and a small amount extra as an "interest" payment.

It's likely for the first few months your teen will spend freely early in the month and then run short of money to do the things they want by the end of the month. By allowing them to make these mistakes in a safe environment, they will learn to budget their money throughout the month and not simply spend it whenever they want to.