Financial advice: How to get your teen to save money, and to get into the habit of saving on a regular basis
Teaching your teen to save money
The first thing to teaching your kids to save money is to be a good role model. We are our children’s first teacher; if we want them to save money then we need to save money ourselves. They learn there values from us, if we want them to value money and respect it then we need to show them how through our own actions. Your children will learn how to save money best if you teach them trough your actions, and this is the first step.
The only way to teach your kids to save money is if they have some sort of income, whether it is from a job, allowance, or gift money. Here are a few tips on how to teach you teen to save money using their job, allowance, or gift money.
Before you start anything you need to take your teen up to your bank and have them open a savings account, this will give them some sort of idea as to where their money is going. It would be a good idea to make it a joint account until your teen is old enough to handle the money on their own.
Next you need to sit down with your teen and discuss with them the importance of saving some money. Whether it would be for security, or for a big purchase. Explain why you save money and why it is important to you, remember you are the role model. Ask them what it is that they really want, and then ask if they would be willing to put money away to save for it. Ask them how they feel about saving money, and if they feel it would be worth it. This is mainly to open up a conversation with your teen to see how they feel about saving money, and also to let them know how you feel about saving money.
Next you need to negotiate a set amount you would like for your teen to put into the bank account. A good amount would be a percentage of what they make or a dollar amount, it really depends on what they are saving for and how much they would like to save. No less then $10 or 10% would be a good starting point for your negotiation. At first your teen will probably not be willing to put money away but you should just encourage him/her and remind them of the thing that they are saving for. If your teen is still reluctant, maybe you can offer to match whatever they put into their savings account, just to help speed things up a little bit. If they were saving up for a big purchase like a car, I would recommend they start off a little smaller, unless you are willing to agree on a set amount they have to save and you take care of the rest. The whole point of them saving for something they cannot get right away is to show them the end result of saving, and if they are saving for a car it may take them awhile then they will get discouraged.
If your teen is only getting an allowance, agree on a set amount that you will take out every time you give them an allowance, and have them go and deposit it into the savings account, with you of course. Do not trust your teen to deposit the money into the account by themselves at first because they may not, you want to make sure they are saving their money. The whole point is to get them into the habit of saving money, and at first they may not be disciplined enough to do so. If your teen has a job you will want to talk to them about having a set amount directly deposited into their savings account. Most employers or banks will have this as an option at no cost to you. Another source of income for your teen would be gift money. It would be a good idea to sit down with your teen and agree in advance how much of the gift money they will put back into the savings account. You could suggest putting half of the money in, or maybe a smaller percentage like 10% or 15% of the total gift money. Just remind them the more they put back the faster they will be able to get what they are saving for.
Now lets face it being disciplined enough to save money is hard enough for an adult, and even harder for a teen. They just do not realize yet what saving can do for them, and maybe they don’t feel like they need to save money because mom or dad will take care of it. It may seem like you are forcing your child to save their money at first, but this is to only to get them into the habit of it and showing them what they can gain from it. They will more than likely not be willing to do it on their own at first, but once they get into the habit of it and see the benefits, they will be more willing to save their money without you forcing them to.
It is our job as parents to teach our children to grow up and be responsible individuals. And teaching your children how to save their money will be a lesson they will keep with them forever.