7. Pay taxes
Of the college students surveyed, only a third prepare their own taxes, leaving the vast majority ignorant of the basics. A mere 39 percent knew that interest earned from a savings account is taxable, while less than half understood that when your salary doubles, your taxes double, at least.Starting with the first paycheck, sit down with teens and explain what's on the stub, showing them where their money goes. To estimate withholding on a higher salary, use the 25 percent rule: 10 percent for federal taxes, 10 percent for Social Security and Medicare, and 5 percent for state taxes.
When it's time to file a tax return, don't do it for them. Teach them the ins and outs of the system by making them an active part of the process, from tracking down receipts and W-2s to doing the calculations.
8. Consider all costs
For many teens, buying a car is their first major investment. But few understand the true cost of ownership, and they often leave expenses such as maintenance, repairs, gas and insurance out of their savings plan.Even if you're planning to cover most of the costs so that they can focus on school, not work, break down all of the expenses, from how much the family's insurance premium increases when they're added as a driver to the cost of new tires. And make them responsible for paying a portion of the expenses, especially gas.
"It's a great budgeting tool," says Bodnar, whose son, a freshman in college, has bought his own gas since high school. "It's an incentive for him to get his summer job, and it's an incentive to hold down the cost as much as he can." Though kids who rely on the family gas card don't blink twice when it costs $80 to fill up the tank, Bodnar's son is keenly aware of the price of a gallon, and he buys his gas from a station that offers a discount for paying with cash.
9. Save for the future
While teens see the value in saving for a car, few have the ability to see 30 years down the road. Although 80 percent of college students surveyed have savings accounts, most admit that they lack adequate savings, with 60 percent saying they have slightly less or much less set aside than they should at this phase in life and a mere 7 percent having any form of retirement account.To motivate them to save for the future, use a compound interest calculator to show them the "miracle of compounding," says Neale Godfrey, author of "Money Doesn't Grow on Trees."
"The miracle works to your detriment with debt, but in your favor if you're saving money."
Once they start working, have your teens open Roth IRA accounts. As an added incentive, Howard matches his daughter's contributions dollar for dollar. To add even more diversity to the portfolio, Godfrey advises young adults to buy and hold stock in the companies that make the products they use every day.
10. Stretch a dollar
Even young children can learn the value of a dollar."Don't make money the biggest secret in the household," Godfrey says. "Get them engaged in the process."
Give young kids an allowance and make them responsible for some of their expenses so that they learn how to set priorities and manage their money. Interactive Web sites such as www.kablinga.com specialize in teaching youngsters the value of money in a fun way. Teens with part-time jobs should pitch in, too, saving money for college or their senior year expenses, such as their prom outfit and their class ring.
When it's time for back-to-school shopping, set a realistic budget and involve them in the buying process. Teach them how to shop the sales and find deals on trendy clothes at consignment shops, such as Plato's Closet. If they come in under budget, let them keep 100 percent of the difference.
"Kids will spend unlimited amounts of money as long as it is yours," Bodnar says, "but when their money is on the line, it is a whole new ballgame."