I see how easy it is for my teens to spend money like water, so I asked experts how to teach them better habits

Author Holly Johnson, left, with her husband and teen daughters.

Most parents of today’s teenagers, including me, grew up in the 80s or 90s — well before cell phones and the internet became a major part of our lives. The way we lived, bonded with our friends, and spent money was markedly different than the way teenagers operate today.

We’re part of the last generations of kids who passed paper notes in class, talked on phones tethered to the wall, and saved up money for shopping sprees at the local mall.

Today’s teens have totally different options, particularly when it comes to communicating and spending their money. And like I’ve seen with my own two teen girls (ages 13 and 15), there are also so many more ways to spend now —from Starbucks runs to DoorDash orders, overpriced makeup, designer sneakers, and $1,000 phones.

According to the experts, those different options could be positioning teens for fairly bleak financial futures if they don’t also learn positive financial habits. Here’s what parents can do to teach their kids how to successfully manage money in spite of the new reality they live in.

Teach teens about delayed gratification

New York financial advisor Lawrence D. Sprung of Mitlin Financial says the ability for teens to make purchases quickly and easily from the convenience of their phones is both a blessing and a curse. It can help them save time and money, yet teens can also make purchases without even discerning if they truly need something — or if they’re better off saving their money instead.

Sprung says parents have to take the time to educate their kids on delaying gratification and have them think before clicking to make a purchase. For example, parents can encourage teens to place an item in their cart and wait a specific amount of time, maybe 24 hours, before buying. Asking if the item is something they truly need or really want is another way to cut down on unnecessary, unplanned purchases.

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Use real-life examples to impart financial lessons

Financial advisor R.J. Weiss of The Ways to Wealth says parents should emphasize that managing and making money is a skill anyone can learn — and that good financial habits take practice.

To that end, he recommends using real-life examples to talk about spending choices. Maybe that third Stanley bottle they had to have last year wasn’t the best use of money.

Weiss says you shouldn’t try to make them feel bad. Instead, ask reflective questions like, “What purchases do you feel good about? What purchases do you regret?”

These types of questions can help teens figure out where they might make different financial decisions in the future, which is a major part of the learning process.

Help teens automate their savings

If your teenager earns money through any type of work, it can make sense to have them save some of their earnings. They can save a percentage of their income or a specific dollar amount each month, but the savings should be automated so it happens even if they forget.

Financial advisor Patti Brennan of Key Financial, Inc. adds that parents can even help their teens set up a Roth IRA for the future. From there, they can help them pick investments for the plan and teach them some investing basics at the same time.

Over time, watching their balance grow should help them realize the power of automatic savings and compound interest.

Incentivize teens to learn about money

While teenagers are unlikely to gravitate toward personal finance books if they have the choice, financial advisor Sean Lovison of Purpose Built Financial Services says paying kids to learn about money can pay off.

Lovison says he pays his own teenage daughters $30 per chapter when they read books like “Rich Dad Poor Dad.” In addition to reading each chapter, the girls have to spend time explaining what they learned and why it’s important.

Lovison also plays financial podcasts and audiobooks in the car.

“Even if they don’t pay attention the whole time, topics that come up spark valuable conversations,” he said.

You can also consider matching funds teenagers contribute to a savings account or a Roth IRA. If your teen is able to set aside $100 per month for the future, for example, you could match that amount or a percentage of their savings. This can incentivize teens to save more for future “needs” instead of using all their income on “wants.”

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Lead by example

Financial advisor Evin Edens of First Horizon Advisors says that children and teens learn a lot by observing their parents, so those who want to impart solid financial lessons to their kids should lead by doing. This means making smart financial decisions at home, but also discussing financial topics openly with teens to remove the negative stigma around it.

“Explaining what you do for a living and how it supports the family helps teach the value of hard work,” said Edens. “Talking about topics like taxes, debt, and budgeting also builds a solid foundation.”

Casey Brueske of PenAir Credit Union adds that giving kids insights into the nitty gritty details of your household budget can help them learn how money works in the real world.

For example, give kids a basic understanding of your monthly take-home pay, plus how it gets allocated toward fixed monthly bills, discretionary spending, and retirement savings. Show them the details, but also don’t be afraid to explain mistakes you have made in the past and what you learned.