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Updated Jul 26, 2013 - 2:39 pm

Talking the money talk with teens

Many high school teens simply don't know as much about money as they should...and without parental guidance they may graduate right into financial ruin. A lot of them don't really understand the difference between a gift card and a debit card, don't know how to write a check, have never considered a budget, and while they have a mild understanding of credit, they certainly don't realize that it's not like bumming five bucks off a friend for lunch with the promise to pay them back...someday...(while secretly hoping they'll forget)!

As a parent, are you a little afraid to talk to your kids about money? Could it be because you don't really understand it all yourself? Phillip Kim of AXA Advisors Southwest in Scottsdale has found that aside from the birds and bees, the money talk is probably the most uncomfortable for parents, especially if we aren't comfortable with our own level of expertise on it, or if we grew up in a household where discussing money wasn't considered appropriate. But Kim says it's important now, as fall approaches and another year of school begins, to sit down with your teens and talk about a couple of concepts.

The First Concept is "Where does money come from?"

Teens need to learn that money doesn't grow on trees nor appear magically in their parent's wallet or from the ATM. And they need to learn that all money isn't designated for "fun" stuff like the movies, iTunes or weekend trips. You might explain the family budget with a money in-money out method and help them set up their own budget with their allowance. Kim suggests if they get, for instance, $40 a month, show them how to make it last the whole month long, with some for savings, some for needed items, some for fun, and learn not to spend all the fun money at once! Some parents even take a little back right off the top. There are taxes to be paid in real life you know!

The Second Concept is "Understanding Credit."

Kim says his company AXA Advisors actually recommends working with students on building credit at a young age, but only if they can do so without maxing out their available balance, straining to make the payments, or worse, defaulting. He says it's only something that can be done with a lot of parental hand holding, but it's especially important to learn as teens head in to college! They'll be hit with credit card offers left and right with low, low interest rates and incentives to apply!

If you don't really feel competent to instruct your teens in the areas of financial responsibility, Kim points out there are other resources to help you out. One of those is Junior Achievement of Arizona which has been educating K-12 students about entrepreneurship, work readiness and financial literacy for 56 years. Another valuable asset is your local Boys and Girls Clubs .

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