Preparing your Teen for Independence: Setting Rules and Allowances

Jan 03, 2014

What parent doesn't want his or her teenager to exhibit personal and financial responsibility? The process requires a delicate balance of giving them enough guidance to ensure they are making healthy choices while also giving them enough freedom to be independent.

“In a few short years, your teenager will be on his or her own, making their way through the world,” said Leslie Bloom, CEO at “It’s important to use this time to prepare them for independence and for the real world.”

How can you teach your kids financial independence?

Photo of Kids Playing Football

Bloom suggests starting with the basics. “We encourage parents to make a contract with their kids,” she said. “Having a contract in place can help set rules and expectations.” According to, things that should be included are:

  • Chores and other household duties;
  • Understanding the consequences of breaking the rules of a contract;
  • Understanding that parents are willing to listen to all problems/feelings;
  • Curfews;
  • Agreeing to not take drugs or alcohol; and
  • Homework completion and grade requirements.

Parents can even use an allowance system to reward their teen for following rules and meeting the requirements of the family contract.  “Holding your teen accountable for different responsibilities is important in their journey to becoming an adult,” said Bloom.

Teaching your teen about personal responsibility and rules is just the first part to preparing them for independence. The second part — helping them learn financial responsibility. Giving an allowance at the end of the week not only gives them something to work towards, but teaches them how to be accountable, too.

So, how much of an allowance does your teen deserve?

“An allowance can be a great way to teach teens money management skills and help them learn how to make decisions, deal with limited resources, and understand the benefits of saving,” said Trevor Bush, vice president & manager, Arizona retail banking division at Washington Federal.

Well, that depends. There's no single correct way to handle giving an allowance. Deciding when to start, how much to give, and whether you want to link the allowance to chores are choices that should be determined by both parents and the guidelines from the family contract.

“Remember, an allowance is supposed to be a teaching tool,” says Bush. “Following through on your promise to give a regular allowance sets a good example for your kids and is incentive for them to honor their end of the bargain.”

Other suggestions:

  • Set clear guidelines for what kinds of expenditures the money is for.
  • Discuss wants versus needs, savings, and spending money wisely.
  • Set a good example by budgeting your own finances.
  • Consider requiring that some portion of the money earned from you go into a savings account.

“Making sure your teen understands the lessons of spending wisely, saving and budgeting is essential to building the foundation for a successful financial future,” said Bush. “It makes kids money-conscious."

Once your teen is ready, Bush recommends setting up a bank account for your teen. While the type of account you open with your teen will vary depending on their banking needs, this is an important part of your teen establishing more independence.

“Whether it’s a free debit card account, or a savings account for college, it's our job as parents to teach good money skills because these skills don't teach themselves,” said Bush.

Responsibility is not a lesson that can be learned from lectures. You cannot tell teens to behave responsibly and expect that your parenting job is done. Communicate often with your teen about both personal and financial matters and remember responsibility and the journey to independence is a growing and learning experience for the whole family.