Last Updated Aug 25, 2011 1:22 PM EDT
"My 15-year-old son got a job working in a high-end bicycle shop. Although I am happy he is earning money, I am concerned because he wants to buy a $900 bike now. I told him he had to save half of each paycheck and he could spend the rest as he wished. He, of course, was not pleased with me. We've talked a lot about living within limits and not needing the best of everything at 15. I understand that he is not mature enough to understand completely, but I am looking for some words of wisdom to help me explain this to him without him taking it personally." --Jayne
I turned to some experts for help with Jayne's question. Alan Lysaght and Denis Cauvier, co-authors of The ABCs of Making Money 4 Teens, offered this advice:
First, there's nothing wrong with wanting a first-class bike. Cycling is a healthy hobby, it can be a practical way for a teen to get around without a car, and a bike sure beats a high-priced video game system.
Second, the mom should resist the urge to lecture. If she responds, "Nine hundred dollars for a bike? That's crazy!" she's missing a great teachable moment with her son.
Instead, she should sit down with him and understand, without passing judgment, why this is the bike he needs. "Is he caught up in a name brand and feels he has to have the best of everything?" Cauvier asks. "What if he has done his research and realized he's going to have it for the rest of his life and this bike will hold up? Or maybe he is a competitive athlete. Hats off to the parents for helping a young person develop this thought process and be a more aware and savvy consumer. That's great parenting."
Then they should set a plan. After saving 50% of each paycheck, and accounting for his other weekly expenses, how much does he have left each week to save for the bike? "It's a great lesson for kids for their whole life, because it forces them to learn how to budget," Lysaght says. "They might see, 'OK, well, if I can only apply $10 a week to this bike, it's going to be two years before I can buy it.' Then they can see that instead of spending, say, $20 per week on junk food, if they applied an extra $15 to the bike, they'd get it that much quicker." This process also focuses his attention, Lysaght says. When he sees years of scrimping ahead of him, he might realize that a $400 bike is sufficient for his needs. Above all, parents should resist the urge to simply write a check for him to help him out (although that's not likely to be Jayne's problem).
Third, help him consider some entrepreneurial options. Is there an employee discount at the shop? Does he race and could the shop sponsor him to defray some of the costs? "Is he a good-looking kid who might appear in ads for the shop, with the parents' permission?" Cauvier asks. Help the child brainstorm ways to make more money.
Finally, the authors advise, Jayne should stick to her guns on the 50% savings rule. When his daughters were growing up, Cauvier required them to save 50% for long-term investments (like college), 25% for shorter term investments (like a new iPod), and 25% to spend however they wanted.
Cauvier told his daughters that when the time came, they might opt not to go to college; they could buy a car or invest in real estate. "But we preached that money got them options," he says. "It gave them a sense of freedom and independence, and when they were of age, they would decide what to do with it. The independence card -- 'This will help you become more independent and have more choices' -- resonates with teens. This is really what they want deep down inside."
Do you and your teens argue about money? Click on the "contact" link above to submit your comments and questions.
More on MoneyWatch: