A three-part series on guiding kids from kindergarten through high school.
Part 3: Ages 14-17
Your high school-age (pre-college-age) children will soon need to function on their own financially, so consider these finishing touches.
Step one: Help your children set up a checking account, so they can get familiar with staying on top of their account balance and pay their expenses by check.
Step two: Explain how debt works, and show your children a credit card statement (if you have one) that includes finance charges. A surprising percentage of teenagers didn't understand that banks charge interest on the loans they make. Many teens don't even realize that credit cards are a form of borrowing. Consider giving them additional money each week or month for gas purchases, and get them a gas station credit card that they can pay off each month.
Step three: Let your children invest. Your child may not yet have the money to buy a Treasury bill or 100 shares of Apple, but you can buy mutual fund shares at very low initial payments, and many fund companies have programs especially set up for teens. Look together at the fund's most recent holdings report and see how many companies you recognize–and help your children monitor the performance of the investment. Show them on a simple spreadsheet how a regular monthly investment compounds over 10, 20 and 30 years. Chances are you, yourself, will be astonished at the accumulation opportunities of the very young.
Step four: Your children have entered the summer job years, which gives them an opportunity to learn about taxes. Children who have never held a job before and thought that taxes didn't need to be paid until April 15 (or not at all) will learn a quick lesson from their first paycheck statement. Most employers will be withholding far more tax than your children will end up owing, and the FICA withholdings provide another teachable moment. (You can, of course, file a W-4 claiming exemption from withholding, but appropriate payroll taxes will still be withheld.)
There's more, of course, such as sitting down with your children and discussing charitable donations (some parents save all their charity solicitations for six months and then sit down to go over which look most appealing) and the need to save receipts if your children go into business for themselves (such as mowing lawns or housesitting animals). Consider those optional elective courses in the overall curriculum.
If your children manage to graduate from this money mastery home-school program, they'll be far better prepared for the real world of money than you probably were. And they'll be far more likely to succeed financially than 95% of their peers, who will enter college with only a dim idea of what a budget is.