Money doesn't grow on treesWe want our teens to know the value of a dollar. But, like most parents, we’ve had some false starts and failures in teaching them about money. It’s a tough topic, complicated by our living in a  society that relies heavily on credit purchases and payments over time. It’s hard for teens (and for many adults), to see the true value of a dollar and learn to plan for financial success. But we’ve made progress teaching our teens using a simple method we’d like to share with you.

The best way we’ve found to reach and teach them is by encouraging them to participate in our “real-world” finances and financial decision-making. For them to do this we’ve had to explain some basics about how spending works in our society—things that might seem obvious to us but may appear totally different to a teen.

For example, we go to the mall and charge $400 on needed clothes and school supplies. As adults, we know we’ll see that $400 added to our credit card bill at the end of the month, plus some interest, but our young teen sees only the new clothes and will likely have forgotten about the $400 by the time we all reach the food court. Credit and debit cards can obscure the value of a dollar in the short term, yet there’s no doubt they can help finance purchases we would not be able to afford all at once. The trick is teaching our kids to use these cards wisely.

Charging Ahead

There are varying views on whether teenagers can learn from having their own credit cards and statements. Even if your teen isn’t ready for a line of credit, we think showing him your monthly statements can help him participate in his purchasing decisions and better understand how the money exchange really worked. At the risk of getting some rolling eyeballs from our teens, we also remind them at the register that “we’re going to charge this purchase and pay for it later or spread the cost over several payments.” It may seem obvious to you, but it’s new to a teenager.

There’s no better way for your teen to participate in financial decision-making than by using his own money. Whether you’ve decided to provide a weekly or monthly allowance for your teen, or she has a job, she should use her money to help get the things she wants.

The difficulty, of course, is that the things teens want never seem to fit into their limited budgets and, sometimes, don’t fit into ours, either. Your teen might not be able to afford that surfboard or cell phone on his own, but by telling him you’ll pay for only half makes him the decision-maker. That’s when the learning starts. Does she really want it? Is he willing to wait or sacrifice other things for it? What’s it really worth to her? You might be surprised at the decisions your adolescent will make.

Depending on your teens, you might want to invite them to participate in a family meeting about finances, especially when decisions could affect them. You might think, as we did, that a teenager wouldn’t sit still for something like that, but you’d be surprised at how interested teens can be in money and how to use it. Try it.

College-planning sessions are great times to do this, but preparing to buy any large-ticket item can be a good excuse to talk about how to budget for things, as well as a reminder that not every purchase should be immediate. It’s hard for most adults to resist the marketing promotions of top retail stores and car dealers. Just remember that if your teen spends more time watching television than talking to you about finances, he’s hearing more about why he should have a new car or video game than how to pay for one.

Different Strokes

Some parents will be your allies in teaching the value of a dollar; others will be your enemies. Even parents who share your economic status might not share your views on how to teach teens about money. Stick to your guns, because no one knows your teen better than you. When Johnny’s parents gift him a new convertible for graduation, or Suzie gets an extravagant prom gown, remind your young spenders of how credit works, and keep them focused on their own financial situation.

On the upside, your teens will see how some of their friends will have to work or wait for something they want. Other friends will have allowances and budgets set by their parents. The more your teens can participate in managing their own finances, the easier it is for them to understand and accept the benefits and pitfalls of other lifestyles and spending habits.

By finding ways for your teens to witness and participate in financial decision-making that affects them, you give them a model for how to handle their own finances. This helps them to understand how money and credit work. It enables them to embark on their own financial planning with the confidence to handle money wisely, knowing the value of a dollar.

Bookie McDonough is a licensed social worker with experience in middle and high schools. Andy McDonough is a former public school educator, education consultant, and freelance writer. They live in New Jersey and are raising two teens.