Ask Paul: How can I raise my teens to be good with money?

Should parents charge teens board and invest it for them, or let them spend freely when they get their first job?

Reader question

Hi Paul, my 16-year old daughter and 14-year-old son have just started their first jobs. One as a swimming teacher and the other at a fast-food franchise. While I am very excited and proud of them, I want to help them set up good money habits early on.

They have always received pocket money and know how to stick to a budget.

Both are privileged to receive super, with one having the option of an extra employer contribution of 0.5%. I have requested they pay me 30% of their wage for board and am investing it in Vanguard kids accounts, which will transition into their names when they turn 18.

My daughter wants to move out for university and is looking towards a Europe trip and, ideally, buying a house as soon as possible. My son just wants to have fun.

Obviously, I will continue to pay for all their basic expenses, but what is the balance for encouraging them to become fiscally responsible? - Anita

Paul's response

Well, Anita, I think your job is already mostly done. I find kids and money a bit like kids and good dental health. If they are taught dental hygiene early, they tend to maintain this practice.

You comment that they "know how to stick to a budget", so despite your daughter being awake already to the critical role of owning a home while your son is cheerfully spending, is not a concern to me.

They have been taught the skills they need by you. Obviously, you should try to grow this knowledge whenever you can.

Putting 30% of their wages towards board into a Vanguard kids account is a big reinforcement for them. They will get to see the benefits of saving, investing and compound returns.

Much happens in life, so keep at it when it comes to talking about money with them, but I don't see any reason for you to be concerned.

You have done the most valuable thing any parent can do: teach money skills as early as possible.

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