7 Ways to Help Your Teen Become a Financially Independent Adult

Yahoo

08-07-2025

Experts recommend starting the conversation around finances by giving your teen an allowance so they can practice managing money and making real-world spending choices.
Talk often about credit, debt, and budgeting to help them avoid financial mistakes and build smart habits.
Encourage them to find a job to earn their own money and allow them to make and learn from their mistakes to grow financial independence and confidence.It's always been a challenge to transition into adulthood, but kids these days have it even tougher than we did. 'Teens are growing up in an economy with a high cost of living, record levels of student debt, and a more complex financial landscape than ever,' says Jennifer Seitz, certified financial education instructor and director of education at Greenlight.
A 2025 survey even found that a whopping 50% of parents pay for their adult children's needs, shelling over an average of $1,474 per month. While many parents are happy to help when their kids are facing a financial crisis, having to support your adult child on an ongoing basis isn't sustainable for most parents—especially when planning for our own lives and retirements.
All of this is all why teaching financial literacy to our teens and young adults is more important than ever. 'Early exposure to money management helps guide teens before they make big financial decisions, like whether to take out student loans, work a summer job, or buy their first car,' Seitz notes. Still, according to a recent survey at Greenlight, while teaching financial literacy is a priority for parents, parents also rank it as the hardest life skill to teach their kids.
No worries—we've got you covered. Here, we'll share expert-driven tips to teach teens financial literacy skills that they can carry with them into their young adult years.
Raising more financially independent teens means offering them practical tools, helping them gain real-life practice, and teaching them important financial concepts. Here are seven pieces of financial literacy advice from experts we connected with.
If you don't already give your teen an allowance, now is a great time to start. says Shalini Dharna, CPA, financial advisor and CFO at Dharna CPA. Doing so is a hands-on way to teach kids that we all have infinite wants, but only a finite amount of resources. And you don't have to run to the bank and take out cash for their allowance (like in the old days). Now, you can give your child a debit card made for kids to use, or give them money on a digital wallet app, like Apple Pay. Either way, the idea is to give them a set amount of money on a regular basis so they can learn to manage it.
It's vital that you talk to your kids about how credit cards work, the cost of interest, and the importance of paying credit card balances in full, says Seitz. 'When teens understand that debt isn't 'free money,' they're less likely to fall into avoidable financial traps,' she says. 'It will also equip them for future decisions around student loans and car loans.'
Model the concept of loaning money and paying interest on it by offering your teen a small credit line (let's say $10 per month) and charging them 20% interest on it. If they don't pay it, then the interest increases—just like a real credit card. This will help them learn that they need to pay off any money they borrow before it snowballs into something they can no longer manage.
It's essential to teach your teen to learn the difference between necessary spending—like groceries and essentials—and trendy, desired purchases, says Seitz. Teach them that once you become an adult, you need to ensure you can pay your bills before you go out and buy a pair of expensive designer sneakers. 'This lays the groundwork for spending within your means and resisting impulse purchases,' she says.
Dharna recommends having regular family conversations about money and about your family's finances. 'Start planning weekly family money dates—maybe like a Sunday after brunch and talk about how things are going, financially,' she says. During these talks, you might discuss what bills you have, and how much you are bringing in. 'The more it's talked about, the more comfortable your kids will be also in managing their own money and sharing their own concerns,' she explains.
According to Seitz, it's never too early to discuss even more complex financial topics, like investing. Keep it simple and straightforward, since it may confuse your teen if you delve too deep.
"Introduce investing early to take advantage of compounding: Even small amounts invested consistently can grow significantly over time, thanks to compounding returns,' she says. 'Showing them how their money can grow helps teens shift from short-term thinking to long-term planning.'
Budgeting is an important part of being financially literate and managing your money well. Sarah Kipnes, LCSW, PPSC, licensed therapist, recommends showing your kids the ins and outs of budgeting.
'With your teen, use a budget template to walk through today's cost for different categories—rent, food, utilities, internet, phone, gas, entertainment, etc.—and compare that to the income your teen thinks they will be earning based on reasonable employment options,' Kipnes describes. 'This will prepare your teen to not only learn how to budget but to get a sense of the financial responsibilities of an independent adult and the realities of spending versus earning.'
According to Seitz, teen should start working as soon as they're ready. It doesn't have to take away from their school or play. Find jobs in your community that allow for flexibility so your teen doesn't feel overwhelmed.
Working a summer job, babysitting, tutoring, or finding other creative, innovative ways to earn money online or in your neighborhood is a great way for kids to learn how to budget their own income. 'A steady income provides even more reason to budget and a sense of ownership over their decisions,' Seitz says.If you want to make meaningful changes this week, start talking more openly about money today. According to Melissa Murphy Pavone, founder at Mindful Financial Partners, maybe the most powerful thing parents can do is to make money a normal topic—something that isn't taboo, isn't something to lecture about, and is just part of the normal conversations you have in your home. 'Teens are especially attuned to authenticity,' she says. 'They're far more likely to absorb your values than your rules.'
Talk about money throughout the course of your day, and do so as honestly as possible. Sharing real and relatable stories works best, because they invite dialogue rather than shame or fear, says Pavone. For example, you can say, 'I once racked up a credit card bill in my 20s that took years to pay off and I learned the hard way how stressful that can be.'
'By consistently weaving these conversations into everyday life at dinner, during car rides, even while shopping you demystify money and teach your teen how to think critically about their own financial decisions,' she says. 'They begin to see money not just as a tool for spending, but as a reflection of their values and goals.'When it comes to teaching money matters, you might be tempted to step in frequently—for instance, advising your child not to buy something they can't afford or to blow their whole allowance on something they probably won't like in a week. But experts recommend taking a more 'hands off' approach, and letting your kids learn about the consequences of poor decisions naturally.
How exactly to do this? Seitz recommends the following:
Begin with clear money expectations, which might look like a weekly budget or allowance
If your child blows all their money early, let them experience the consequence of having a zero balance with no spending for a week
Don't be tempted to give them more cash, so they can learn how to make it last the next time
This natural cause-and-effect helps build self-control in decision making, which is more effective than a lecture alone. However, it's important to be reassuring and kind to your child as they learn. Assure your teen that financial mistakes happen in life, especially when you're young, says Dharna. The road to financial independence is different for everyone, so take the time to listen to how they feel and ask them what support they may need.
Read the original article on Parents