Best Way To Teach Your Teenager About Money

A woman writing into a white notebook about money

When you are sick of negotiating finance or having spending hassles with your teenager, you might want to start them on an allowance.

An allowance can be used for all sorts of spending:

  • Food
  • Movies
  • School expenses
  • Haircuts
  • Birthday presents
  • Clothing
  • Christmas shopping

If I am having ongoing issues with how much money my child spends (or wastes), or I’m becoming increasingly annoyed at how they manage their money, I set them up with an allowance.

This helps me set a boundary and not get more resentful and also they will learn that money will eventually run out. 

I’m going to show you exactly how to set up your young person for success with an allowance. We start with clothing because it is often what they spend the most excessive amount of money on other than junk food and entertainment.  


There are always ground rules that have to be agreed upon for an allowance to work long term.  The whole point of an allowance is to teach the young person how to manage their spending and be responsible for their own expenses. 

Gradually, you as the parent will be out of a job. That’s the goal!


  1. What they are responsible for purchasing? See the list above as a starting point. You can start with one or two until you are more confident. 
  2. How much per year, per term, per semester? This always depends on each family and financial situation. There is a way of working it out though at the end of this article. 
  3. How the money will be given/paid to the young person? Cash is best for smaller amounts, for larger long term items a card attached to an allowance account is best. 
  4. How will they keep track of their spending and allow you oversight as they go? You have to teach them how to manage it if they don’t know already.  either digital or a notebook. They should also have a savings account for their long term expenses like clothing etc. 
  5. What will happen if they overspend and haven’t purchased items they need? The answer is simple…nothing.  The money is gone.  If you absolutely need to purchase something for them because they overspent then they must pay you back before any more allowance is given.  



Clothing can vary between $500 – $1,000 per year per person (see here)

Haircuts approximately $20 every 6 weeks for a guy, $40 for a girl

General Spending can be $20-$40 for the month depending on the age. 

School expenses are often paid at once and will depend on school & subjects

Family and Friends Birthdays, decide $ per person and multiply for a total amount

Christmas gifts, again, decide $ per person and multiply (then divide by 12 months)

Don’t be afraid to keep it limited at first, they will learn to manage and you can give them more as they mature. 

Remember #Only give them what you can afford!


Most often kids are given their allowance monthly, you could also do it fortnightly or when you get paid.  In the beginning, you may want to check in on them every week or every payday. It really depends on what they are paying for and the maturity of the child. 

Once I have an annual amount I divide it up by 12 months (or however often you are paying them their allowance.  Fortnightly divide by 26, Weekly divide by 52 and you will get your amount to be paid.  


Expecting them to keep receipts so that you can return things or keep track of spending which is good accountability, either file the receipt, take a photo of it, write it in a notebook or put a note on your phone.  

It is always going to come down to the trust you have in them and their honesty with you.  They can always trick and be dishonest if they really want to.  Asking for receipts, or balances are precautions you can try. 

In general, you will generally know if they are being wise by what they do, are buying or the clothing they wear.  


This is the WHOLE POINT of getting them on an allowance, this is where the true learning will begin.

You as the parent will have to hold a steady course with what you have committed to with your child.  It isn’t the time to change the plan. 

If they have spent the money they needed for clothes, they will have no money.

If their haircut money is gone, they will have to wait till next month to get a haircut.

As their parent will have to provide essential due items such as school expenses but you have to implement the consequence you agreed to. Either they pay it back or no more allowance. Maybe it will come off their allowance next time?

The important thing is you don’t have to rant and rave, the punishment is the hassle of overspending.  It’s pretty simple. 

Also, remember that learning to budget and save is a skill that needs to grow and they will get stronger if you support them as they learn.  

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