As a younger child, “Junior” probably saved up for shorter-term goals, such as buying a hot, must-have new toy. Now a teenager, the world has changed and he’s ready for bigger financial goals–be that a new car, or even college. While you may feel he never listens to you, the opposite is actually true when it comes to money matters. Today’s teens appreciate parents’ input regarding their finances.
While over the past few years, teens have earned billions with part-time and summer jobs, many have spent most of it. Here are some ways to help your teen save for the future:
Be Her Best Example. Teens are watching. She will most assuredly be observing how you spend money. And if she sees you budgeting a certain amount for household needs, she’ll eventually do the same.
Create a Spending & Savings Plan. Teens cringe at the word ‘budget’. To them, the thought of restricting spending is bad. Instead, you and your son or daughter should develop a Spending & Savings Plan. This they’ll like. To teens, saving is always better if it includes some spending, too. Some families require 10% of teens earnings go to charitable contributions…40% goes into a savings account…the remaining 50% is used at the teen’s discretion. Click here for a Spending Record Spreadsheet.
Get it in Writing. As part of the Spending & Savings Plan, have your teen put savings goals in writing. It makes everything more concrete.
Establish Values-Based Saving. Encourage your child to set goals that are based on his or her values, not on keeping up with what other teens have or want.
Match It. Motivate your child by offering to match what he or she saves towards a long-term goal. For instance, for every dollar your child sets aside for college, you might contribute 50 cents or 1 dollar.
Be ‘Accountable’. Help him or her open up a savings account, if you haven’t already done so. Establishing a savings account under their name provides for immediate financial responsibility. Then help them manage the account. Many credit unions have incentive programs for opening and adding to savings accounts.
The Basics. Introduce your teen to the basics of investing by possibly opening an investment account (if your teen is a minor, this will be a custodial account). Look for an account he or she can open with a low initial contribution at an institution that supplies educational materials that introduces teens to the basics of investment terms and concepts.