From USAA: Teenagers and Holiday Spending

The nice people at USAA sent me over an article on teenagers and holiday spending.  The holiday season presents an excellent opportunity to talk with your teenager about money.  Here’s the article:

Turn Holiday
Spending Into A Merry Money Lesson

>Courtesy of USAA

Many families will use the power of
plastic to make cash registers ring this holiday season. But that might bring
bad tidings after the first of the year, according to a recent survey by USAA
that asked teens how they learn about money. And unfortunately, racking up
holiday debt may be another way parents are teaching bad money management
skills to teens.

According to the survey results,
nearly three out of four of high-school teens say they learn “a lot” or “a
decent amount” about money management from their parents. But it doesn’t come
from lectures – it’s from watching how their parents spend.

“Parents are raising a generation of
big and possibly irresponsible spenders,” explained USAA CERTIFIED FINANCIAL
PLANNERTM practitioner J.J. Montanaro. “Nearly half of the parents
surveyed confessed that their money management habits range from ‘OK’ to ‘horrible’.”

There’s still hope for the upcoming holiday
season, though. Montanaro offers these four suggestions for how parents can
turn holiday shopping moments into lifelong money lessons:

Put Holiday Budgets on a Diet

Just as splurging on extra holiday
dessert can add up around your waistline, the same applies to holiday
overspending, which can fatten up your debt. With more than 40 percent of
parents in the survey admitting they don’t have a household budget, many teens
aren’t subject to the financial discipline they need. Turn this statistic
around and sit down with the whole family to develop a spending budget for each
family member for the holidays. This will help teens develop the financial
discipline they’ll need in the future, while still allowing them the
opportunity to do some holiday shopping.

Making the Most of the Christmas Credit Crunch

For many revelers, the holidays may
seem like a bottomless bowl of treats with no long-lasting consequences. The
same goes for teens who don’t realize that abuse of an ATM or credit card can
cause just as much long-term damage to their financial health. Start by
encouraging teens to avoid the “invisible money” of the ATM until they have the
skills to manage it effectively. Have them set out what they want to spend so
they can see a direct connection between their budget and their spending. Also
don’t be afraid to get out the credit card bill and outline how payments,
interest, and expenses add up to the number on the bottom line, and show your
teen how interest can build up when credit cards are used irresponsibly and the
balance isn’t paid in full.

Give the Gift of the Hard-Earned Dollar

Getting teens to understand the
value of all the hard work that parents put in so they can buy Christmas
presents can be difficult. “Many teens may be missing out on the real value of
the dollars they’re spending, because they aren’t making a connection with the
effort that was put in to make that money,” says Montanaro. With almost half of teens not working for
their “fun money,” according to the USAA survey results, a holiday season job
could be just the ticket to learning the value of a dollar. Encourage your teen
to get their own job so they can see their hard work turn into the cold cash
they’ll spend on their friends and families during the holidays. 

Stuff Stockings with Savings?

Also, remember that there’s no
better way to teach teens to be accountable for their spending than by
empowering them to manage their money. Set up an online savings account and
debit card for them, and show them how to manage and monitor their spending on
the web. When teens can see how their debit card takes money from their savings
account, they’ll better understand how that piece of plastic isn’t an endless
supply of spending power.

Using the holidays to teach teens good
money management habits may make you feel more like Scrooge than Santa Claus, but
learning to be financially savvy is a priceless gift. Visit
for more information about teaching your children ways to develop good money
management skills.

USAA means United Services Automobile Association and its

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
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