Excerpt from Chapter One of Dreams, Dollars and Sense

Front cover for Dreams, Dollars and Sense, Book Two in Paul W. Lermitte's Dollars and Sense Books series.Book Two in the Dollars and Sense Books series

Making Independent Choices

Teaching your teens

  • how to make good choices independently
  • how to set their own limits
  • to understand the risks and consequences of their choices

When kids enter their teens, everything changes. They go through physical changes, emotional changes, and psychological changes. They are also called upon to take on more responsibility, to be more independent, to make their own choices. And a lot of these choices involve money.

These teen changes can be just as scary for you, the parent, as they are for your kids. You walk the very narrow path between imposing strict discipline (and choking their spirit and individuality) and giving them free rein (with possible negative and dangerous consequences). Obviously, there will be different expectations and responsibilities for a 13-year-old than for a 19-year-old. But one principle to keep in mind is that once a privilege is given, it is much harder to change it or take it away.

For example, if you do not give a curfew to a 14-year-old but expect her to have common sense and come home around midnight, and she doesn’t show up until 2:00 a.m., you are likely to be upset. And, to make matters worse, when you then try to set a curfew for midnight, or even earlier, the same teen is likely to be frustrated and uncooperative. Give privileges gradually, just as you have increased your kids’ allowances gradually.

The teen years can be challenging ones. But there is much potential for a satisfying outcome if you take the time to work with your teens to establish meaningful parameters and provide them with positive support. The following guidelines should help in regard to finances, and you will find that they apply in other areas as well.

Seven Key Independence Guidelines

When your teenagers start to flex their muscles of independence, you can use these guidelines to help you find the balance between being too strict and being too hands-off. Believe in your children. Show them that you have confidence in their abilities to solve problems and make good choices. They need to feel your support at this tumultuous time of life, especially when they have made mistakes and are suffering the consequences.

Show your teens you have
confidence in their abilities to solve
problems and make good choices.

1. Stand up for your values

No matter what values your kids try to adopt or defend, promote your own values. Show confidence in your value system. If your son starts smoking, and you do not like smoking in your home, do not allow it. You might not be able to get him to stop smoking (at least not right away), but there is no reason to put up with smoke in your residence, because it affects your personal property.

If you do not want your teens to wear clothes with controversial advertising or graphics, say so. But be ready to give your reasons why. By defending your personal boundaries, you will gain your kids’ respect, and they will learn to articulate their own values. And by discussing the similarities and differences between your values, your kids will learn how to make better choices in their lives (even though their values may not always mesh with your own).

Discussion promotes understanding and is a valuable tool in relationships and in making money decisions. But be prepared to compromise, especially as your teens get older (e.g., rather than forbidding your teen to wear a certain T-shirt because you find it offensive, work out a compromise that you can both live with, such as only wearing the T-shirt while at home, not out in public). The well-known expert on parenting Barbara Coloroso reminds us in her book Kids Are Worth It!, “If a situation is neither life-threatening, morally threatening, nor unhealthy, ask yourself if the natural consequence of what your child is doing would give life to your child’s learning. If the answer is yes, stay out of it, and let nature take its course.”

2. Let teens make their own choices

As your kids become older, and gradually more independent, let them make more and more of their own choices. Keeping in mind their age, experience, and maturity, let them choose what they spend their money on, what things they do, and what clothes they wear. You will probably put more limits on younger teens, but your goal is to have a confident 20-year-old who can handle his money responsibly.


Our eldest son wanted to buy a low-rider bicycle (when they were a fad) from a friend for $40. I talked to him about the pros and cons, and then he decided to offer $20. His friend accepted the offer. After a month, the bike sat idle. Ryan then sold it for $10—a $10 loss. It was a good learning experience for him.

If you continue to make your teens’ decisions for them, your kids will struggle to learn to make wise choices. And remember, letting them decide means letting them make mistakes. Mistakes are the best teachers of all. When they make choices they later regret (as they are bound to do), be sure to offer your understanding, and sometimes, your silence.

3. Give guidance and offer good ideas

Although you want your teens to make more of their own decisions, that does not mean you are out of the loop. Your job is to offer suggestions, advice, and good ideas. You could suggest that instead of buying e-books, your kids borrow them from the library. Instead of going to a movie, they could invite their friends over to watch a video. Discuss the dangers of wasting money on things they do not really want or need, like excessive junk food, trendy shoes, or makeup. Get involved. Give useful information. And then stand back.

Make your guidelines simple and clear, and make sure your teen understands them.

4. Do not substitute money for involvement

Some parents give their teens money instead of time and effort. If kids start to see you not as a role model, but as a source of ready cash, it is hard to get them to change their perspective. Set aside some time during the month to do something together that you both enjoy (or make it their choice), such as a lunch date, a sporting event, or an outdoor activity.

5. Create a sense of economic scarcity

For your teens to develop a sense of financial responsibility, they must operate within an environment of economic scarcity. That means they have to feel that there is a limit to how much money they can spend. Put them in a position where they have to make choices between one option and another (e.g., buying a new outfit or buying concert tickets).

Do not give your kids extra money above their monthly allowance (see Teen Cash Flow Worksheet, page 154); let them earn the extra by working if they want to buy fancy extras such as high-tech gadgets, sports equipment, or a leather jacket. Exception: If your teen is very involved with sports, music, or studies and does not have time for part-time work, discuss needs and dispense the extra amount weekly or monthly but let your teen manage the cash. Once a week is a good time frame to provide money. This is similar to a regular paycheck and provides a routine.

Advertising tells us that we need to have everything we want to be happy, so it is important to help our teens create goals and set realistic expectations. Even if you are wealthy, it is a good idea to limit how much money your kids get for allowance. As long as your teen is a dependent (i.e., a student or unemployed), give her an allowance. But once she is independent and has finished her education, expect her to support herself. Paying parents for room and board is a reasonable expectation if a young adult is working full time.


Clients I know set aside the room-and-board money they charged their working teens. This meant there were savings available for loans if their teen needed one, or for a down payment for an apartment or a car.

6. Refuse to support bad habits

If your kid wants to smoke or drink, he should have to pay for it himself. You might not be able to stop them from taking up bad habits, but you can refuse to be an accomplice and a source of cash. Defending your values sends a very powerful message. According to Strengthening Our Skills: Canadian Guidelines for Youth Substance Abuse Prevention Family Skills Programs, “In adolescence, peers and media (including social media) may be contributing factors for substance abuse, but a positive family environment can offset those influences.”

Buying cigarettes for teens is a controversial issue for some. Concerns about teens stealing to supply their cigarettes or paying older youth to buy for them may cause parents to buy the cigarettes themselves. Think carefully before doing this. Discuss the dangers and create solutions with your teen.


Provide opportunities for your teens to talk to someone who has kicked a drug habit or has had a bad experience. Teens need to hear stories firsthand, rather than as a movie-of-the-week scenario that seems irrelevant. Attending an Alcoholics or Narcotics Anonymous meeting together would be an eye-opening experience.

7. Establish clear guidelines

Although you want your kids to spread their wings, you must provide guidelines. Make them simple and clear, and make sure your teen understands them. They can cover such topics as house rules, property rules, curfew, school, car use, and phone privileges. Spell out the consequences of straying from the guidelines. Make sure your teen acknowledges and accepts the rules and possible consequences.

But wait! There’s more! To get the whole book so you can read the rest, please check your library for a copy, or visit our Order Page. 

The rest of Chapter One addresses:

  • Nine Important Independence Tips and Traps
  • More Reality Checks
  • Step-by-Step Summary of Paul’s Key Points

And you can see what the whole book covers by viewing our Table of Contents.

For a set of free, downloadable worksheets you can write on and refer to later, including a Cash Flow Worksheet to help you get started with your new personal finance program, visit our Worksheets Download Page.