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How to Guarantee a Teens Financial Independence Be Your Teens Money Coach


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Why do we need to become our teen's money coach? What could entice an already busy parent to put another thing on his or her full plate?

Today, our kid's financial future has never had such a great potential to be theirs for the taking. Even with all the bad economic news, no time in history has it ever been easier for our young people to become truly wealthy and have their money under their control. And the amazing thing is that any kid, any ordinary kid, can do it.

They have one thing going for them that we do not have: time. But to make the most of their time, they need to know how to take advantage of today's economic opportunities. To do that, they need to be coached, just as they would be in sports. They need to be tutored just as they would be in math or science. Bob Nardelli, former President and CEO of Home Depot, says that he “believes that people, unless coached, never reach their maximum capabilities. "

What do we currently teach our young teens to do with money? First, we teach them to write checks. We teach them to get good jobs and establish credit. Our culture teaches them they must buy a house and then lenders approve them for more than they can truly afford. Advertisers teach them they need this or that. They teach them that debt is not unusual or unhealthy.

But, as our teen's money coach, we can teach them what average millionaires do, even if we didn't make smart choices when we were young.

We can teach them that interest can work for them dramatically if they start early or it can really work against them if they are not careful. For example, if a teen works (and we all want our kids to work) only eight hours a week making $8, he or she can make at least $3200 a year. It seems like a piddly amount to invest, $1000 or $2000 a year when your teen wants desperately to buy an Iphone or a hot guitar. But as your teen's money coach, you can share two secrets.

The Sure Path to Millions Takes Time

First, millionaires are made bit by bit over time. That $2,000 can double every seven to ten years depending on interest earned in investments. That one time investment of $2,000 earning 10% can grow into $250,000 tax-free over forty years, that's about $360,000 in taxable dollars, a handy sum at retirement. Even investing $2,000 for six years before age 20 can garner your teen $3.3 million. Show your kid the numbers.

Experience Is the Best Teacher

Two, you can give your teens more control over their finances. One way to do it is to monthly give your teen around the ages of 14 to 16 the money you spend on him or her and let him spend it. Then when he spends his clothing money on a $70 pair of jeans, $150 for an expensive pair of tennis shoes and comes to you wanting money for the movies, turn him down. Let him learn by experience how money works before he goes out into the world. It's the perfect tool for the parent. Let them whine when they run out of cash but don't rescue. Then when they are 25, they won't be running to you to bail them out to make the car payment after they took that money to go on an irresistible Caribbean vacation. You will be teaching them some of the important lessons that lead to financial independence.

Billie Wells is an advocate of financial education for young people. She is the author of How To Raise A Teenage Millionaire in The 12 Winning Secrets to Wealth series. See


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