Most teens don’t have two nickels to rub together, so it seems a bit early to worry about building wealth. But talk to those who have done well for themselves later in life and you’ll find that many of the character traits that lead to their success were firmly established before age 20. If you look at the teen years as the formative years — when good or bad money habits that last a lifetime are learned — you could argue that they are the most important wealth-building years of all.

The main lesson you should teach your teens is how to find a balance between current and future needs. In other words, you want them to understand that it’s fine to spend your allowance on the iPod you want now, as long as you also put money aside for university later. Every teen should have a savings account and be encouraged to save some of his or her allowance and summer job earnings every week — say 10% to 20%. A chequing account and a debit card should follow by age 18.

Perhaps most importantly, ask your teen to take part in your family’s big financial decisions. “The lines of communication should be kept open,” says Barbara Garbens, a fee-for-service planner in Toronto. That means that if you expect your teens to pay for part of their education, you need to make that clear early and help them plan. You should also realize that they are watching you closely. If you are open and honest about how you spend and save your own money, your teen has a better chance of learning from your example.

Top financial lessons from my teens
by Kaitlin D’Silva
I’m now 18 and I’ve just finished first year at the University of Western Ontario, but I remember when I was in Grade 8 and I desperately wanted a laptop computer.

I saved every penny of my gift money but I knew that it probably wouldn’t be enough. So I made a proposition to my parents. If I paid for half of the computer (which would cost me $700), would they be willing to pay for the other half instead of getting me other gifts for the next year or so?

They liked the idea. So I took on odd jobs, babysitting and raking leaves for the neighbours to earn money faster. Saving that $700 was hard work, and it took me over a year to accomplish, but I still remember how proud I felt when my dad took me out to Best Buy to pick out my new laptop.

There were also times when I learned lessons the hard way. I loaned money to friends and never saw a penny of it again. The fact that other people may not share my values about money was an eye-opener. Now, if I lend money to friends, I try to keep it to a minimum so they won’t have a hard time paying me back. And I have no qualms about reminding them that they owe me the money if they seem to have forgotten about it.