Teaching Teens to Save Money
Here are 4 things you must do to help your teen become a smart saver.
1. Have a “why.”
The power of why is a well-known goal-setting tool that can help your kids stay focused and on track when it comes to saving. Help them identify their “why”—it could be saving for a special camp, an expensive game or computer, college, a car, or helping others. Having a why helps serve as a compass; it gives them reason and purpose and forces them to make choices from intrinsic motivation, which is an important factor in overall life happiness and success.
2. Encourage them to get a job.
The number one way to have money is to make money; teens may rely on an allowance and even manage that money well, but there’s nothing quite as powerful as putting in a hard day’s work and then pondering how (or if) to spend that money. And not only do jobs help kids learn to manage money and understand personal finance, but they also provide valuable work experience that teens can then leverage into better, higher-paying future jobs.
3. Have them use their student ID
As teens begin earning and spending, they learn that the world can be an expensive place. Help them find ways to make their goals or desires more affordable by becoming smart shoppers. A valid student/college ID is like a key that can open endless doors to money-saving opportunities:
- Movie theaters, museums, amusement parks, and recreational facilities frequently offer student rates.
- Microsoft, Apple, and HP all offer discounted rates for students on hardware and software.
- AT&T, Verizon, and T-mobile all have student rates for low-priced phone lines.
- Retailers such as J. Crew, Forever 21, Banana Republic, and many more offer student discounts as well.
- Digital subscriptions to publications such as The New York Times and The Wall Street Journal offer special student rates as cheap as $1 per week.
4. Separate their spending and savings.
Teens are old enough to open a checking and savings account (with a parent) at a local bank—look for youth accounts that have no minimum balance or monthly service fee. Now is also a good time to look into a debit card for kids that helps them learn to manage their money safely and securely—some cards set spending limits, notify parents of purchases, even automate allowances.
By opening a checking and savings account, you can help kids visualize the different pots of money and keep the two separate. Having a separate account for savings goals also allows for them to use powerful savings tools such as automatic deposits and transfers, which help savings become a no-brainer habit. They can access their accounts online to track their progress, and even name them to help keep their “why” front and center, such as “my first car fund” or “college tuition.”
Helping teens find their motivation, earn money, and manage and save it carefully is one of the greatest gifts we can give them. Creating good financial habits at a young age helps create a foundation for future financial planning and wealth building.