While personal finance curriculums are expanding in schools nationwide, much of a teen’s money savvy is learned in the home.

According to Mike Sullivan, director of education for Take Charge America, a non-profit credit counseling agency in Phoenix, all teens need some financial home-schooling before entering the “real world.”

“It takes a lot of time and effort to set our children on the path to a secure financial future,” he said. “Not only are parents responsible for setting an example in the home, they must be proactive in incorporating financial lessons into their teens’ daily life. Teens will carry these lessons with them long after they leave the nest.”

Sullivan has five tips to help parents equip their teens with the knowledge to save and spend wisely:

  • Encourage a part-time job: Jobs help teens understand that earning money requires hard work and sacrifice. Foregoing a night out with friends in order to work may shift and strengthen their appreciation for the value of a buck. Moreover, as kids get older, their wants and “needs” become much more expensive. Your teen may think twice before spending his or her own hard-earned cash on lavish or impulsive buys. Additionally, a job will help your teen understand the impact of taxes on take-home pay. After the government takes its share, your kid’s paycheck may seem pretty meager, especially since most teens earn minimum wage at entry-level jobs.
  • Offer an allowance: If your teen is too young for a “real” job or needs to spend more time studying, consider giving him or her a monthly allowance for completing extra work around the house. This allowance should cover all “wants,” even if it means they have to save up for a few months.
  • Create a budget: Work with your teens to outline all of their expenses. In general, it’s a good rule of thumb to continue providing for needs – like food and school supplies – and requiring him or her to fund “wants,” such as video games or a night out with friends. You may also consider passing along a portion of auto or cell phone expenses. Just make sure they understand who pays for what to avoid potential squabbles.
  • Mandate saving: Help your teen set up a savings account at a nearby bank or credit union. Agree on a mandatory savings program to allocate percentages of their allowance or paycheck toward specific goals. For example, 20 percent for emergency savings, 30 percent for a college fund, and 10 percent towards saving for any big-ticket items. Then your teen can spend the remaining 40 percent as they see fit. This practice will help teach the importance of saving cash and ensure he or she isn’t squandering limited funds.
  • Matching funds: Give your child an extra reason to save cash by creating a matching program. Commit to matching your teen’s savings account dollar-for-dollar upon graduating high school. Or, if your teen’s heart is set on a car, offer to match a down payment.