Tips for Physicians: Raising Money-Smart Teens

I believe that all parents seek to have their children become financially independent as young adults.

It is a complex process having to do with inherent personality, peer environments, innate skills, opportunity, and luck.  I have learned from both personal experience and from many others that there are some things that might help and some that might hurt.

This blog will focus on the teenage years. Last week I focused on early childhood. A blog to follow will focus on the years just before and during college.

In middle school and high school, your child may have the opportunity to work for money.  The older I get and the more I see, the more valuable I think this experience is.  Having to show up on time, be well groomed and polite, and ultimately be a good worker is spectacular training for the future. 

Although many children substitute extracurricular activities for work (especially athletics), I think work should be strongly considered if possible. Even later on during the college years, work during the year or at least on school breaks teaches in a way that nothing else can. 

Author Charles Murray notes in a recent book that many of our youth are choosing "unpaid" internships to try and gain an edge in college or grad school admissions.  He suggests that time spent as a service worker instead (a waitress, waiter, etc) teaches some important life lessons about getting along with people and working for others. A teenager can get a head start with this during his high school years.

This is also the time to shape both your own and your child's expectations on where they might go to college.  The cost of an undergraduate education can range from very little (live at home, work, go to the local community school), to easily a half million dollars of pretax income.Graduate school costs can be partially offset by work or, again, cost a fortune. 
Taking on debt for college by either you or your children is a very serious decision.  Studies show very little benefit to what school you attend unless there are some very specific occupational choices.  Burdening yourself and your child with years of debt is a strong hindrance to financial independence.

It should be a goal that an education should not be accompanied by significant debt.  This involves choices including where to go, ways to abbreviate time spent in school (such as by taking advanced placement tests and community college courses), and investigation into scholarships and grants (military service included).

Many children succumb to peer pressure on where they should go to college.  You may need to work with them to guide expectations and curb any sense of entitlement.

Next week I will share some tips regarding how to foster financial skills during the college years.

What are some ways you teach your children to be financially responsible?