1. You appreciate it more if you earn it
Kids need to learn the concept of saving. This got lost when credit/debit cards became the norm. To begin, invest in a piggy bank and then find a teachable moment, like the next time they ask for the latest toy. Explain that while you aren’t planning to buy it for them, you will teach them how they can buy it themselves. If it is a significant purchase, you may need to incent them by offering to match what they have been able to save. They can accumulate birthday money and you can also provide a list of “extra chores” that you are willing to pay for in the coming weeks.    

Because they can watch the money accumulate, it helps to keep them motivated. This method not only slows down the process of purchasing but also gives them time to change their minds several times before they actually buy something. When they have finally saved the money and make a purchase, they will feel a real sense of accomplishment in having earned it themselves.

2. Where the money in the ATM machine comes from
Today’s younger generation has no idea where the money in the ATM machine comes from. I believe this disconnect exists because of advances in technology and how we conduct our money matters today, using direct deposit, online banking, and credit/debit cards for our purchases.  

To help your teen make the connection, begin by opening an ATM checking account in their name.  Have a serious discussion with your teen regarding the need for safety and privacy of their ATM card. Then deposit your back-to-school clothing budget for them into the account. Explain that they will be responsible for this money throughout the next six months. Give them the power to choose what clothing they spend it on, but make it clear that they will not receive any more clothing money until six months has passed. They may blow it all on designer jeans and then realize they don’t have enough to buy new sneakers. However, they will learn to consider their choices carefully as well as see the value of sales, coupons, and non-name brand choices.

You should also teach them how to reconcile their purchases with online banking, and let them experience trying to purchase something when there is no money in the account. Regardless of how you tackle this lesson, teens need to understand the critical link between the ATM machine and their account balances.

3. How to budget
The reality of life on their own is usually a shock to new graduates. We can help by properly setting expectations and teaching them how to budget so that they will have a clear understanding of how to survive with their “starter salaries.”

A classroom project on careers is a great reality check for students. Students are prompted to choose a likely career for themselves. They are then required to do online research regarding the following:

• Find a current job posting in their desired field
• Determine the likely starting salary and benefits for that position
• Locate an apartment in the city of the job posting, calculating rent, utility costs, and renters insurance costs
• Determine how they will get to work, including car payment, insurance costs, gas and maintenance
• Calculate net salary, including deductions for employment taxes, income taxes, and medical insurance
• Itemize expenses for student loan repayment, clothing, entertainment, and food

Students learn the difference between gross and net salaries, as well as how important it is to consider all their choices carefully when living on a budget. This will give the teen invaluable insight into the eventual reality of life in the real world. 

Each of these money lessons can help your child learn how to be responsible, independent adults who have a real grasp on the value of a dollar. Teach them well so that they will be able to earn, save and spend in appropriate ways.