Talking to your teen about managing money

We’re often told money is a taboo subject, but educating your teenager to make smart financial decisions is one of the most important things you can do as a parent. Teaching them good money habits will set them up for independence, and being up-front about the family’s financial situation will help you to cope together during tough times.

This article will help you to:

• have open, inclusive chats about family finances

• teach your teen how to manage their money

• lower your financial stress

• avoid family fights about spending.

Teaching good money habits

By modelling core money skills – such as setting a budget, building an emergency fund and recognising scams – you’ll give your teen an example to follow when they start to make their own financial decisions.

We asked Glen James, host of the podcast, for his tips on how to explain finances to teens in a way that makes most sense to them. In this video, he covers the downside of credit schemes like Buy Now Pay Later and talks us through the give–save–spend budgeting system. 

Video transcript.

For info on tax, superannuation, credit reports and more, you could share the government's Moneysmart website with your teen. If they’re over 15 and planning to start work, nudge them to apply for a tax file number (TFN).

Recognising and coping with financial stress

Running into money trouble is always tough and can impact every member of the family. It can limit where you go and what you do, and can leave everyone feeling stressed and worried about the future. Signs that financial stress is affecting your family can include:

• feeling burnt out

• having trouble sleeping

• losing your appetite or indulging in comfort eating

• arguing with your kids or partner

• avoiding family and social events

• displaying other symptoms of anxiety or depression.

Coping with financial stress

The first step is to look after yourself so that you have the bandwidth to tackle your money problems. Find time for whatever fills your cup and makes you feel steady, whether it’s connecting with your favourite people, doing some crochet, or practising calm breathing on a free meditation app. It’s always a good plan to get regular exercise, to eat healthily and to prioritise sleep, but these self-care practices are especially important during stressful times.

If you’re experiencing financial stress, remember that you’re not alone. Every year, millions of families in Australia go through hard times. It’s usually a temporary situation and you’ll get through it with careful planning. Talk to family members, good friends or community leaders. If you’re feeling overwhelmed, you can get free support and guidance from one of ReachOut’s trained parent coaches.

Managing a money crisis

Even with an emergency fund to cover essentials in the short term, there can be pinch points for the family budget, whether from a surprise bill, a rent increase, a mortgage rate rise, your shifts being cut at work or becoming a single parent. 

While you might not be able to control the cause, there are steps you can take to improve your situation.

• Find relief services. Organisations like OzHarvest and Ask Izzy can help with things like food relief, small loans and emergency housing.

• Lock down spending. Credit card interest charges, overdraft charges and late fees will only add to your debt. Map out your essential expenses and payment due dates so everything’s clear. Use a budgeting app like Goodbudget that has free plans available.

• Contact your providers and your teen’s school. Most energy companies offer payment extensions and other hardship allowances, and schools may be able to waive certain costs and defer fees.

• Generate extra cash. Sell unused homewares, sports gear, clothes and plants on second-hand sites like Facebook Marketplace and Gumtree. If you need anything, check your local Pay It Forward group for giveaways, or try op shops first.

• Research government support. Check the various government assistance payments you might be eligible for – you can apply online.

• Get expert help. You can access free, confidential financial counselling from the National Debt Helpline. 

How to talk about money problems with your teen

It can feel natural to want to keep your money problems secret from your kids, which comes from a good place of not wanting to burden them with adult problems. But the truth is, your teenager will likely pick up on your stress anyway and can feel better when they’re included in the conversation. They likely feel anxious about how money troubles will impact the family, and their life in particular – whether they’ll have to sacrifice after-school hobbies or their allowance, and how the need to ‘tighten the belt’ might affect their future plans. Talking calmly and openly with them will help you both to work through some of the stress of what is a complex situation. 

Here’s a step-by-step guide.

• Note down key points you want to share with your teen (depending on their age) and think how you’ll answer questions they might ask (like ‘Will we have to move?’).

• Pick the right time to dive into this emotional topic. A Saturday morning might be easier than after a busy weekday when everyone’s tired and stressed.

• Find a calm, private place so you’ll both be able to think clearly without distractions. Good options are their bedroom or even the car parked somewhere quiet.

• Focus on finding solutions, not worst-case scenarios. Be honest about the family’s situation and your stress, but be careful not to make your teen feel guilty or responsible. 

• Plan to your strengths as a family. Maybe your teen is great with dogs, or you might be handy with fixing electronics. These kinds of skills can generate freelance earnings. 

• Ask your teen questions and listen to their responses and ideas. If they’re upset, give them time to calm down, and reassure them you’ll get through this as a team. (Get more tips on having difficult conversations.)

• Keep checking in to keep your teen in the loop and look out for signs they might be in need of extra support.

Often, what you need to turn the situation around is time – time to find another job, to repay debts or to get used to lifestyle tweaks. In the meantime, use this period when the family might need to spend more time at home to strengthen your bond. It could be something small like playing a board game together, going on a family bike ride or having a movie night at home. 

Volunteer at a community garden, visit relatives, or check out free local events. The saying that the best things in life are free is true! Enjoying your time together will help your family to focus on the things you do have, starting with one another.