This is a tough year for graduation presents. Whether it’s for the high school or college graduate, chances are you’re going to be able to buy less than you want.

Rule number 1: Don’t beat yourself up about this. This economy is what it is, and we all have to adjust.
Rule Number 2: Just because this year is bad doesn’t mean years in the near future will be bad, so think longer term with your gift. And that means investment vehicles.

I know it doesn’t sound tangible, or glamorous, or even useful to a teenage mind. Okay, honestly, I tested out this pitch on a college freshman (thinking he still straddled both worlds, or at least had a fresh memory of high school graduation). It went over like a lead balloon at first. But I kept tweaking it until he smiled.

So here’s what made him smile: Not just an investment vehicle, like a CD in his name. And not just an equity investment, which is sexier and liquid (and risky). And not just a local state bond fund, for which he’ll get a tax break.

No, what he thought was an “awesome present” was to give him a starter portfolio. That means you buy a little bit of everything, portioned out according to his age, designed for short-term, mid-term, and long-term growth strategies. Just like you have (or would have if you had the money)

It’s not only a great way to start out a lifetime of well-balanced savings and investment habits, you can use the opportunity to teach your kids. Take them into the bank or credit union, sit down, talk to the investment advisor, and plot it out together. Over the long-term, your kid will make some money. And it’s fun. I’ll bet they’ll love picking out one stock to buy. They’ll have opinions that are worth listening to, as well, once you really ask what teens think will be a growth market: fuel cells, biotech, tech medicine, telecommunications. They can watch the movement of the stock over time.

Before you think you’d have to spend a fortune, you don’t. You can do one of two things, depending on your budget:

Option 1: just purchase minimum buy-in amounts. You can invest in a CD for $100 in some cases. And individual equities don’t have to be expensive. Believe me, I now own some worth less than $10 a share. Same goes for municipal and state bond funds; they trade with a ticker price as well. The kids can choose a variety. The idea is to create a well-rounded starter pack. Maybe encourage your kid by saying you’ll contribute to each investment in the portfolio each year at this time (or tax time, because there are certain benefits if you want to divert funds into IRAs) for the next five years, if they also contribute. So you’ll match contributions. And in five years, they’ll be in the habit of contributing to investments.

Option 2: You can’t afford the CD buy-in, or minimum amounts other investments might require. Don’t fret. There are two other options. The first is to give them a portion of your investment portfolio—another great teaching opportunity because you and your graduate will have to create a chart and keep track of their percentage. So, if you have a CD socked away that has $500 in it, tell them, say, $50 of it is theirs. When it comes due, let them reinvest that $50.

The second option is to create a fake portfolio. Use real money, but you do it at home. Make up a portfolio folder, and write down investments. Track them with your kid, so you can calculate interest they’re earning. Say you “bought” them a $50 CD. In a year when it comes due, pay them interest. You can keep doing this until you can afford a real buy-in. And for some portions, like buying a share of stock, you’ll be able to afford a real buy-in now, so tuck that certificate into the portfolio folder; it will be the real portion.

Enjoy. It can be fun to invest together. You might learn a lot yourself, make new investment decisions for your own portfolio. And no, I can’t resist this last line: It really is the gift that keeps on giving.

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I know you think this sounds like a joke, but it’s not, especially for parents out there with boys.

Wait. My husband is yelling that I’m sexist from his dent in the sofa. (That’s what I call the area he has literally worn a huge dent in from overuse. You could trace it with chalk, like the police do at a crime scene, and see an outline of his laying down body).

I’m not being sexist. I’m just an immovable realist. When boys and girls date, and the boy is interested in more-than-a-friend way, he often wants to treat, and the pressure is still here, in 2009, for him to do so. Now, sometimes the girl will jump in and offer to pay for herself, or treat next time, but the discussion is still there, and the possibility of one person’s allowance bearing the load of the entire bill is the point here.

By the way, the advice I will eventually get to in this blog is not just for teenagers. It can apply to your college students as well.

So now that summer is essentially here, there’s a lot more going on, going out, and all of that costs money. What are the rules for extra money for your kids, when it comes to dating and all the added activities summer brings? Sometimes, it’s a matter of you handing out more money so your teen can go dutch with a date to all sorts of events, like fairs, after that week’s allowance has long run dry.

Okay, the 4 ground rules of dating:

1. If your teen has an allowance, not a job: You probably need to insist that he or she not treat other people, even if they can’t live without them. Really, before you simply pitch in for the other kid, who may well break your kid’s heart by the end of the summer, think about it.

Say your teenage son finds it embarrassing to be unable to treat. Guess what he can do? He can get a job. It’s a great way to teach a lesson about affordability. If there aren’t suitable jobs available in your area, give him some real labor to do around the house and yard—things that you really would be paying someone else to do.

2. If your teen has a job, and wants to spend every cent on the girlfriend: You may have a variety of feelings about this. Weighing in from the dent in the sofa, my husband, who seems to be particulary amused by all this, thinks that’s fine. He has that “let the kid have fond memories of a summer love” attitude. Of course if the kid must help pay for his college, he can’t afford that fantasy.

In any case, I’m way too uptight for that. Think about insisting that your teen put a portion of those earnings into savings. And not just because the girlfriend may dump him by the end of summer, but because they’re not married and he should be saving some money. (see my post about Saving Wisely).

Offer to match the amount he’ll save as incentive. It is true that the desire to treat a loved one is gracious, so you don’t necessarily want to squash that urge, just temper it.

3. Teach teens how to talk about money to the people they’re dating. This is harder for teens than it is for college students, but you know what? It’s hard for everyone, including adults. If they can learn to have honest conversations about money at a young age, they’ll be way ahead of the game.

It’s important if one of the dating couple has a job and the other doesn’t, or if both don’t, or even if both do. It also prevents anyone from feeling like they’re being taken advantage of. Tell your teen that bit specifically if they look at you like you have three heads when you suggest they speak to their brand new love of their life about “being cheap”. (Yes, that’s a quote).

So, what they need to do is talk to their date about how they’ll work out the money part of their relationship. It’s so much pressure at that age, this is what I suggest to teens, and even college students– and please chime in with any other ideas:

Tell the person you’re dating that in an ideal world, you’d love it if money didn’t matter and you could treat them all the time. But you’re just not in that place in your life yet. So, can there be the assumption that we’ll share the expense of the things we do, unless one of us says specifically that they want to treat for this.

It doesn’t have to be awkward: Let’s say they want to go on a boat trip, but one of them, or both of them, don’t have the money. Say to each other: How can we plot to get it? (Let them plot together to hit you up for it. As long as they’re sharing the burden of making it happen, the plan is working.)

Very important here: If one teen has a job and the other doesn’t, you need to tell the teen with a job to be sensitive to the other person’s ability to afford an outing before suggesting it. Hey, this is great advice for adults, too, so use examples from your own life.

My husband and I have really good friends who simply can’t afford much right now. So when we want to splurge on an expensive restaurant, we don’t ask them to join us unless we’re prepared to invite them as our guests. And still, you don’t want to insult someone’s dignity, so it better be a special occasion. I tell these stories to kids all the time, and it helps.

I also tell them the reverse: It’s okay to tell someone you can’t afford to do something, can we do something else? I do that in my own life. I have to reign in wealthy friends from time to time. The less energy we put into the embarrassment, the better.

4. Say both your teen, and the person who’s attached to their hip this summer, simply can’t afford to go to special events, and you want to help. Before you end up just treating them both, give them a chance to earn it together. Got a younger kid you’d like babysat for an afternoon? Ask them to let that kid tag along for a day—which could be fun for them anyway—and in return you’ll treat the concert.

Good luck. You’ll need it. And please share teen dating stories!

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Okay, here’s one I didn’t see coming from my college students: A Depression survivor’s mentality on hiding money like a squirrel storing nuts.

I walk around in life working off the general assumption that my students are bored into rigor mortis when I start talking about the economy, and what to do with their money. I’m not being insecure. This is what they look like when I start talking about financial matters:

First, the Pavlovian response of eyes going immediately half-mast. Next, fingers inching toward either the open Doritos bag next to them, or the keyboard in front of them (as if I will magically not notice they’re checking email in class).

So you can imagine my surprise when I overheard students discussing not trusting their banks and wanting to take their money out, because they’re not earning any interest anyway. Unable not to sound eager, I jumped in and asked how they expected to establish credit, save money, invest, and function in the society. They weren’t against the idea, just angry that banks had gotten so much bailout money and from what they could tell, weren’t helping people with mortgage foreclosures, and were still firing employees.

I almost cried. And not because I’m a good person and they touched me with their concern for their fellow man. It was better than that—they had actually been listening in class and digested what we discussed about the economy. I’m sorry for sounding callous, but for any teachers out there, you understand these gratifying moments are all we have. You know it’s not the enormous paycheck.

Anyway, their vehemence led us, in our final days before summer, to a discussion about how to choose a financial institution. We made a list of 3 criteria that makes a good financial institution:

1. It must offer all the products: Debit cards, credit cards, mortgages, other loans, investment vehicles.

2. It must be local. I was pleasantly surprised by this. It was so citizen oriented. They compared it to buying produce from local farms sold at a nearby farmer’s market. If they know where the food comes from, and the farm is visible, the farmers and grocers couldn’t really do anything awful, like use killer chemicals, without people knowing.

In the same vein, a local financial institution, without a big national name, means they can walk into a branch and get personal service, get someone to answer questions and have a human being take responsibility if something goes wrong.

One more key reason they wanted local: They grasp that financial institutions invest in real estate, so they want the investments to be local. When I asked if they meant like in It’s a Wonderful Life, their eyes opened. I do believe I saw their synapses making connections. The Building & Loan, minus Jimmy Stewart’s drunk uncle who lost the deposit—that’s what they wanted.

This age group, probably thanks in large part to the blogosphere, does not trust an institution that isn’t authentic and accessible. Besides, they claim that bankers treat them like second-class citizens.

3. Proof that the financial institution isn’t run by crooks. You can’t march into a national bank and demand to see how things are run.

After we made the list, they sat back, collective arms folded, challenging me to present them with such an institution, knowing nothing of the kind exists.

Then I asked if they knew the difference between a credit union and a bank. Not one of them did. (Actually, two professors I stopped later that day had a vague idea, but didn’t really ring the bell either.)

A general definition to tell your kids: Credit unions are not-for-profit financial coops that conduct business for the mutual benefit and welfare of member-owners. Only members can bank at a credit union, and every member has an equal vote. Banks are for-profit financial corporations that conduct business to maximize the profit for its stockholders. Those with more stock have greater say.

Here’s how credit unions and banks each rank for the students’ 3 criteria.

1. Must offer all the products. Credit unions and banks are generally the same. They both offer everything. But only members of a credit union can do business there. Anyone can open a bank account at a bank; you don’t have to be a stockholder. There are certain tradeoffs:

In some cases, banks have slightly better interest rates, but credit unions generally have more reasonable lending rates and non-punitive lending policies.

The news is full of stories about banks slapping higher interest rates on someone’s account for just one late payment, among other things. They’re also imposing fees for being over the limit, charging higher fees for cash advances and ATM surcharges, and reducing credit limits, to make up for their previous poor lending decisions.

Also, credit unions have lower fees for certain services. The FDIC and NCUA, which is the credit union insurer, are both government insurance for deposits up to $250,000.

2. It must be local. Credit unions, by nature, are local entities. Banks aren’t, with the exception of community banks, which can still have board members that aren’t local because majority stockholders elect bank Board members, which are paid. The Board of Directors at a credit union must be members, which means they’re local, and it’s a volunteer job. Board members are elected by other members.(The kids loved that they’d get to vote for the people who run their financial institution.) All investments a credit union makes are local. Not true for even community banks.

3. Proof that they aren’t crooks. Now, there’s no way to prove that a bank Board member is more likely to be a crook than a credit union Board member, or vice versa. But credit unions, with the egalitarian voting system, got the nod from my students. They cited the following, while tears of joy glistened in my eyes, because they used this phrase correctly in a sentence: Credit unions have a check and balance system.

So, they agreed to find a credit union and check it out. I’d love to hear what the kids in your life think about the comparison.

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It’s inevitable. Your college kid calls to announce his or her intent to move off campus. Here’s the part where I cringe: They have it all figured out.

What all figured out means is that they’ve chosen the other kid or kids they want to live with. Maybe they’ve seen a cute or apartment house they like, or an area where they want to look.

That’s it. If they’re really advanced, they’ve done some math and figured out what each kid would pay, and how much money will be left over for beer.

The idea for this blog post walked into my classroom the other week, in the form of one of my students. She was very upset, and equally haughty. “Can you help me deal with my rip-off landlord? He’s totally screwing me over. I can’t believe he can get away with this. Are there any lawyers who help students?”

Always feeling protective of my students, I said I’d help, not to worry. She relaxed, calming down enough to tell me the problem. “This girl, my roommate, who is my friend, which makes it totally awkward, isn’t paying her share of the rent. My landlord keeps calling me and threatening me. He hasn’t even called her, and it’s making it like it’s my fault. I’m paying my share.”

A few minor question later I find out that: a) The lease is in my student’s name only; b) She hasn’t even confronted her friend/roommate once; and c) There is no subletting allowed on the lease.

“What do you mean, your landlord? This all your responsibility. He has nothing to do with this problem, and actually you’re lucky he doesn’t kick you out because you lied about who would be living there. You’re delinquent on your rent, and blaming him.”

Let’s just say that sometimes my students are not fond of me. Her face screamed betrayal. And so what has followed are these 3 lessons on leases and responsibility, which I emailed to my student:

1. Try not to be the sole person on a lease if you are sharing an apartment or house, and sharing the rent. It puts your budding credit at great risk. If you are the sole person named in a lease, and the only one who signs it, you are legally solely responsible for paying. It is not the landlord’s responsibility to hunt down roommates. It is yours. So you become the apartment manager, in a way, if you sign a lease alone. Be prepared to confront your friends if they don’t pay. And if they never pay, be prepared to pay for them or ruin your credit

If it’s unavoidable: Say you rented the apartment first, or your friend and his or her parents have terrible credit, so the landlord won’t accept them as co-signers. In these cases, get something in writing from your roommates stating that they are legally responsible for their share of the rent. Make their parents sign it. Blame your parents if you dread the confrontation. Say your parents co-signed the lease for you and won’t allow roommates without a notarized, signed statement.

2. Be up front with the landlord about who will be living on the property. Landlords have a lot of rights if you are not up front about this. In the same vein, try to get a lease with rights to sublet, in case one of your roommates needs to transfer to another university, or someone’s plans otherwise change.

3. Make sure it is in the lease that the landlord is responsible for repairs. This is one area where students are often taken advantage of. Many times landlords don’t take very good care of student rental properties. Make sure you know your rights. If the paint is peeling, the landlord has to paint. If the toilet is constantly clogging, the landlord has to fix it. Make sure you inspect the property and make noteof anything in disrepair before you sign the lease. Write down that disrepair on the lease with your initials and only sign the lease if the disrepairs are included on the lease as pre-existing conditions.

If the landlord makes noises about this, and says you can forget it, don’t back off. Call any local real estate agency that rents places, ask them about the pre-existing condition lease law, and they’ll tell you what your landlord is responsible for. Then go back to the landlord and explain what is legally your right. If the landlord doesn’t comply, you can file a complaint with police,and that landlord can be prevented from leasing property. Do not be intimidated.

Please share any off campus rental stores—good tips, or nightmares to avoid.

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There are many pros and cons on either side of this debate, and I have heard many horror stories about either scenario—paying teens, or not paying teens. So before we dig in I’d like to say, for the record: I’m writing this with great trepidation.

First, let’s go with the pros of not paying your teenager to babysit a younger sibling.

1. The siblings foster a bond not based on a business transaction.

2. You save money on child care.

3. Your teenager won’t expect payment for helping out with other family concerns.

4. You don’t risk the younger sibling’s feelings being hurt. If a kid finds out their brother or sister is only playing with them because they’re being paid, this can very hurtful, and in turn condition young kids to expect payment to play with others.

5. You don’t set a precedent of paying to be with the sibling. What if your teen starts to expect money to watch your toddler while you’re on the phone for 10 minutes? The “I’ve created a monster” is always my biggest fear.

Okay, now the pros for paying your teenager to babysit.

1. You can expect the teenager to do more. If you’re paying, you can add cleaning up after the kid to the deal without feeling guilty.

2. You don’t have to worry about taking advantage of your teenager. The teenager did not give birth to your other child. They are not guardians. If a teen is spending a lot of time watching a toddler, or eight year old, it can take away from their lives. If you pay them, it’s their side job.

3. You’re free to go out at night on a date with your spouse.

4. They learn the responsibility of taking care of children as a job and can do other babysitting for extra money. You can feel comfortable recommending your teen to other parents looking for babysitters, if your teen has babysat officially.

Usually, by the time I’ve made lists of pros and cons, I’ve decided what I think. But in this case, it’s just the opposite. The pros and cons are too even, the tradeoffs too hard to choose. So how about if we try both? I know, you think I’m nuts. How can we do both?

Try this, and please report back if it works. I test drove it and the pilot program is going nicely so far.

Here are a couple of choices for doing both, striking a balance:

1. Pay for nighttime babysitting, but not daytime. Nighttime, especially on weekends, is a teen’s most valued free time, time spent with friends or with their favorite electronics. And they need their down time as much as adults do. If they sacrifice this to do a job, and they’re paid, they’ll learn the lesson of sacrificing for money. Plus, you won’t feel like you’re taking advantage of them.

2. Expect a certain amount free, and then pay after that. You’re working late. You ask your 16 year old to pick up your 8 year old at elementary school and take care of her until after dinner. Oh yes, and please make her dinner, too. Maybe the pickup and the first three hours are free, but you pay for the time between 6 and 8 p.m. that involved dinner preparation, helping the 8 year old with her homework, and such.

This latter choice was suggested to me by a very enterprising teenage girl, who said: “Once it cuts into my phone time with friends, TV time, and homework time, I wouldn’t get cranky if I were also earning money.” She said she didn’t mind playing in the afternoon for a while for free. That’s just “hanging out time anyway.”

You can also set a certain number of hours watching the younger sibling that are free, and after that it’s paid. For example, the first six hours are free, and after that it’s paid. But before you set the number of free versus paid hours, use this formula:

Figure out how many hours of babysitting you need each week, compare it to your teen’s free time (time not in school or involved in activities). Don’t take up more than half their free time without paying them.

Please share systems that have worked in your house, or your experiences if you try these.
 
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Paying your kids, especially teenagers, for good grades, is a trend I find so disturbing my fingers can barely slow down enough to write intelligibly.

Here’s the most elemental theory I subscribe to when it comes to money lessons for teenagers—and I believe in this philosophy both as a professor, and as a trustee of a school. Two things money lessons should never interfere with: Lessons of intrinsic satisfaction, and systems where there’s a non-monetary award already in place that has value–in this case, grades. If you pay your kids for good grades, you interfere with both these things by trumping them. And the kids will lose out in very profound ways. Here’s how:

1. Killing a sense of intrinsic satisfaction. It’s bad enough that standardized testing, intense focus on grades, and conditioning like assessments makes learning so pragmatic that curiosity can get squashed. Learning should expand exponentially: Curiosity gets piqued and a kid goes on a journey to discover, uncover, find answers, satisfy questions, find more questions, make sense of man’s relationship to the world.

If you pay kids for good grades, it places even more emphasis on just the grades, just learning what will ace the tests, all the pragmatic parts of our institutionalized education. They will not develop a taste for a tough challenge just to find an answer, or seek to invent, because it’s not part of the reward system you’re aggressively conditioning them to obey.

Curiosity is a natural. We must nurture it in our kids. Encourage them to follow their questions. By the time kids are 6 they have a sense of competition among peers, wanting to please teachers, wanting to do well. Don’t squash it. It’s a gift, keep up intrinsic satisfaction and one day you’ll have adults who can find satisfaction and joy in their work, not just be slaves to a paycheck. Ultimately, people who enjoy challenges of work do better anyway. You could argue they’ll be better earners if they’re focus isn’t always on money.

2. The all-they-care-about-is-money syndrome. When you trump a non-monetary reward system, like grades, which have their place in motivation and getting competitive juices flowing, you create a monster. These are the kids who think the only thing that matters is money and material goods. These are the kids who are conditioned, by parents, to think they should be paid for waking up in the morning. These are the kids you find yourself screaming at that you put a roof over their head. They don’t start out ingrates. We condition them by breaking the above two rules of money lessons and what money should never interfere with.

And it’s really unfair to them. They’ll get conditioned to be under-stimulated by the small, simple pleasures in life. They’ll want to keep up with the Joneses as they age.

Reward teens with good grades with privileges, not money..

Here’s the theory behind these ideas, and please send along more privileges if you’ve found they work. The theory: Robust curiosity and good grades means your kids are tuned in to their sense of dignity, personal goals, sense of responsibility, self worth, and often their sense of community spirit. Kids who do well in school tend to help other kids, and have a developed sense of social conscientiousness. Feed those wonderful qualities with more freedoms, which enhance their sense of intrinsic satisfaction.

1. Let them borrow the car if they have a license.

2. Let them have a later curfew.

3. Let them hang out with friends, even if it’s a school night.

4. Let them buy a car at age 16, not 18, or even older. (Since this one intersects with money, you can also set up a savings and investment plan with a responsible teen to put allowance and side job money in CDs, savings accounts. Help them open these accounts).

5. Treat them to a weekend away with a friend.

6. Treat them to concerts or other special events that interest them.

7. Let them make more decisions about their lives. Let them choose what they want to do with their summer, instead of imposing strict rules. Let them opt out of outings such a visiting your friends. Let them decide when and how to do their homework, even if it means they choose to watch TV first, or during. If their grades slip, revisit freedoms.

And of course, the final question all of this begs? What do you do if they’re not getting good grades, which is what led to payment to begin with?

I say a little old fashioned negative reinforcement by taking away privileges if they don’t do their best. Well, that’s not entirely negative. Show them this list of privileges, and explain that they could be getting all of them. Tell them they won’t get these privileges if they don’t get good grades because privileges are for people who take responsibility.

And if at the end of it, you still really think that only payment for grades will work with your kid, then consider opening a savings account in their name for the money, or a 529 college account, and tell them that the money they earn won’t just be for tuition, but for spending money at college.

I can’t wait to hear your stories about what besides money works.

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Regardless where we stand on how much privacy and leeway teens get with their allowance, some parameters must set or you’re going to be nickeled and dimed to death before you know it.

Teenagers are master manipulators when it comes to money. That’s why it’s such a good age to teach them sophisticated money lessons. When I watch those crafty little wheels spin I know there’s no need to wait until college to teach kids finances.

Here are 4 decisions we all need to make. It’s less important what those decisions are than the fact that they’re made, and put in writing. Make the decisions with your teenagers, have them take the lead, have them write it down. You can both sign it. They’ll take ownership of the contract, and you won’t get into arguments later.

1. Depending on your household economic situation is, decide if allowance is purely spending money, or if it must contribute to the household. If it’s affordable, I would encourage that it’s just spending money. If they earn it, having a certain freedom associated with it is a great motivation builder for being a good earner.

Make a list of what they’re expected to pay for with their allowance. This will also help you set the price of allowance. For instance, if you still pay for activities—movies, concert tickets, going to a fair—and they only pay for products they want, then a dollar for each year they’ve been alive might be okay. But if they have to pay for the movies, or entry fee to a special event, then they need more money because it’s expensive to do those things.

Make a list. Have them come up with the list once you decide the parameters. For instance, tell them that they’re responsible for all the products they want to buy and are constantly asking for. Having them make a list of them makes them really take a look at what they want so badly. Their priorities might change.

2. Rules for what parents pay for. Same drill as #1. You write down, while they witness it, what you’ll continue to pay for.

Danger zone: You can include food, water, shelter if you want. I actually advise against that. It can hurt their feelings and create distance to send teenagers the message that they’re all grown up and it’s a burden to house them. To reduce your cohabitating relationship to a business arrangement with an adult is quite a comment on intimacy. I hear this advice and, honestly, guilt trip, a lot, and I think it’s dangerous, even if the intention is good—to not coddle, to teach them hard lessons about the realities of the world and what things cost; to keep them from being bratty and demanding.

But there are other ways, and here’s what scares me about the “I put a roof over your head” approach: The reality of our world is that there’s a lot of danger to teenagers. We all know this: drugs and promiscuity cause disease, among other things. They’re at an age where they must rebel—must go through a stage of antithesis, in order to grow. Early childhood is the thesis statement of life; you are a product of your parents. Teenhood is the antithesis, where you rebel to see the world differently, to test your independence, which is vital to self care later. In adulthood, we reach synthesis, which is who we end up being. It’s probably a mix of where we came from and what new things we took on.

If, as a parent, you create too much distance during antithesis, then you run the risk of teenagers never confiding in you. When they rebel, they might run to extreme decisions to feel independent. I’m not saying that there’s a direct corollary between the roof over your head speech and teens doing drugs. But I do think that they are far from grown up when they’re teens, and the message that they owe you as if they’re adults will prevent them from coming to you for emotional parenting when they need it the most.

I want my daughter to confide me when she’s thinking of having sex with a boyfriend, or if she wants to try something potentially dangerous, or if she’s not in any shape to drive home and needs help.

So I have to say go easy here to teach lasting, productive money lessons. Money is something so many adults have anxiety about, and I have to say I think some of the anxiety comes from lessons they were taught as teens. Start out small, with the discretionary stuff, see if they are becoming more responsible just from this approach.

You can’t really go wrong arguing about who pays for concert tickets and who pays for the ridiculously expensive jeans your daughter must have. If you make the lesson about the goods and services the teenagers are interested in, they’ll be interested in the money lesson. And that’s more than half the battle.

Try at least to save the roof over your head until all else fails.

3. What is the division: spending, saving, giving to charity? Please do check out my posts on Spending Wisely and Saving Wisely for tips on how to spend allowance. But before that, do decide if all the money you give teenagers is for spending. If you can afford, up the amount each week—at at least $25-$30 and use the opportunity to really teach some money lessons that include investing and helping others.

If you do, definitely get a reloadable prepaid card for your kids. Load the money on each week, and then have them deal it out to spending, saving, and charity. I’m personally a fan of the triumvirate. My daughter has donated to saving animals with at least some of her allowance since she was 6.

Now she thinks about others, is the first one in the house at Christmastime to go in search of clothing and games we no longer use to give to Toys for Tots, Salvation Army, Goodwill, and the local shelters. Very important money lesson hidden here. Take your kid to churches or other donation spots when you donate. Show them what it’s like to live without means.

4. When do teens get extra money?

I’m a sucker for certain things, I admit it, so when it comes to things like proms I not only agree to pay for the dress or suit, but all the acoutrements—the jewelry, the gas for their car if they have one, money to go out with after, the corsage.

I actually think you don’t tell the kids this part. Surprise them on special occasions. Treat them when you feel like it makes sense, or when you can afford it. My daughter recently went to a charity dance for the SPCA (Society for the Prevention of Cruelty to Animals). She not only gathered up her allowance that week, but dug out everything she had hoarded in her “spending purse” and was prepared to bring every cent she had on her person to that event. In the car, I told her to put her money away, I wanted to make the donation on her behalf. She donates a lot. She agreed to let me pay half, but she wanted to give some, too.

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Allowance is inevitable. And it’s a minefield. Your teens are going to share with all their friends how much they get and what they have to do for it. They compare notes and you’ll hear about it if your rules are unjust. And you’ll pay for it in other ways if you’re too lax.

After many complaints, and many times being taken advantage of, I’ve come up with 5 key criteria for giving allowance. And I would love to hear other approaches. The more ideas we have on this teenage paycheck, the better!

1. How much should they get? $1.50 for each year they’ve been alive, if you can afford it. A movie can cost $10, and if you’ve got an older teen who wants to go on a date, anything less is very frustrating. You do not want them to work for money and then not be able to do anything. I’m open to comments here, because you could easily argue that that’s exactly what adult life can be like. But we want to encourage good earning habits and they need to see reward to develop positive habits.

It’s especially important to give a healthy allowance if your teens are involved in a lot of extracurricular activities that are really enriching. Then they truly won’t have time to supplement their allowance income with a part time job during the school year. You don’t want grades to suffer in the name of earning money. You don’t want them stressed with too much to do. Defeats the purpose of school.

2. They must earn it. It is not a given. If they don’t do their jobs that week, they don’t get it. I include “without being reminded” to that credo. If they have to be nagged to do a job, they’re not taking responsibility. Teens are old enough to do it on their own.

Some people believe that kids work hard enough in school and should just get an allowance without additional burden on them; and the focus should be on how that allowance is spent. (I’ll do my next blog on rules for allowance once it’s in their hot little hands. But also check out my posts on Spending Wisely and Saving Wisely). I’ve heard this philosophy for older, as well as very young kids. I’m interested in hearing stories about how that works. What’s it like to get those same kids to do jobs around the house, clean their room, etc. if their allowance is automatic?

I never tried that, I have to admit. From the moment my daughter got an allowance, age 6, she had to earn it. Until that point I paid for everything. The whole point was I was tired of her asking for crap and expecting it without any sense of opportunity cost. If she also got the allowance for free, what would be the difference, except for her counting it out at the store? The free lunch concept, and maybe some good math skills, would be the only lessons to sink in.

My experience with trading allowance for jobs has been nothing but positive. And not just for me, of course. My daughter was always proud to earn her money. Now she is confident she can earn money, and as she gets older, her expectation to be a good earner is all set. That’s such an important goal, and I didn’t even see that one from the outset.

Look at the adults around you. The confident ones are the good earners. I really don’t believe we burden them by asking that they do jobs. I think it boosts their confidence and sets them free.

One more thing: If your kid does a great job and your economic situation allows for it, I’d up the dollar-per-age deal a bit, especially if they agree to invest some of their money in savings and investment vehicles. If you have a savings plan for their money, I’d go with $20 per week at least. $25 if you can afford it.

3. They must do jobs for the common good, not just taking care of themselves and their own space. I don’t like to give money to kids for cleaning their room or putting away their things. Self-care is about personal dignity and sense of organization. No one will ever pay them for those things as an adult, and they should take care of themselves as part of growing up.

The idea of a job is to contribute to something that includes more than yourself. Besides, can you imagine what kind roommate or spouse you’re raising if they expect to be paid for picking up their dirty clothes off the floor? Yikes, I don’t want to field slob complaint calls from a son-in-law, and there’s no doubt my husband would hand the phone to me.

4. They must come up with their own 2 jobs, and when they get a raise—commensurate with experience, which we’ll call age—they need to add a new chore.

I’m not entirely sure where I came up with two jobs as a starting point. Maybe so there’d be room to add a lot more. Maybe to make kids successful without overload—especially since they need to remember their jobs without reminding. Maybe just because that’s what my mother and father did.

Another idea, which a teenager gave me, is to make the two jobs increasingly difficult as the kid ages. So maybe they start out with gathering and taking out all the trash in the house (including bathroom and den wastepaper baskets) and cleaning the kitchen, and the following year they have to mow the lawn and weed. Not a bad approach. Probably better than mine. Maybe suggest to your teens that they can choose one option or the other: make the jobs more difficult, or add a new job.

One warning label here: Be careful about making childcare for a younger sibling count as a job. There are lots of pros and cons, and once you make that decision, you’re stuck with it. (I’ll do a separate blog on whether babysitting should be a paid gig, or considered hanging out. Huge tradeoffs, tough decision, and there might be differences between daytime and nighttime rules. Bonding is key without pay, but teenagers do get taken advantage of.)

5. Do not revoke allowance for bad behavior—even if they really deserve it. I’m now a firm believer in not revoking allowance for any other reason than failure to do their jobs. I have to admit I’m a recent convert to this way of thinking. I used to yank allowance for misbehavior, even if my daughter did her jobs. But once, when I was just furious with my daughter for lying—I still get angry just thinking about it—I told her that she wasn’t getting allowance that week.

Then, what the conniving kid did, thanks to too many lessons in negotiating, is call me on breach of contract. Yes, she used that term, threw it right in my face.

“I lived up to my part of the agreement. You must give me my allowance, or I could sue you. Well, I could if this were the real world. You’re a hypocrite. You have to find something else to punish me with.”

I opened my mouth to add more punishment for mouthing off to me, but…but she was right. The point of allowance in trade for doing a job is to show kids what earning money is like, what sustaining a job with responsibilities means, relying on the reward, and using the reward wisely. Revoking allowance because of a behavioral infraction that has nothing to do with the agreement, is like a restaurant manager docking a waiter’s pay for saying something rude or accidentally breaking a plate, after that waiter just finished an eight-hour shift serving people well. There are laws against those sorts of things.

All was not lost, though. I opted to ground my daughter for lying, so she didn’t have anywhere to go to spend her allowance.

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