These Saving Tips for Teenagers Will Save Them Time Preparing for the Future
There goes the saying that children learn what they live, as per Dorothy Law. Well, this holds true especially in the financial aspect. The kids learn by observing their parents on how they dispense with money. When they are in their teen years, one of the best ways to give saving tips for teenagers in managing money is by showing a responsible approach to money and money management.
Saving money takes time to grow and sad to say that some adults have yet to master it. Most of us are living paycheck to paycheck without acquiring enough savings for emergency funds. The outset of the pandemic has given a difficult time for many people to save. But then we all need to shed off saving tips for teenagers by telling them not to follow our footsteps of putting saving money on a limbo.
Today’s teens will soon become adults tomorrow. And you will be doing them a favor if you teach them to save money early on rather than letting them figure out the lessons on the significance of saving on their own. So, here are some of the most promising saving tips for teenagers to help them be prudent on money habits and teach them the value of having a sufficient savings account for unexpected outlays.
Discuss Wants Over Needs
The first step to giving saving tips for teenagers is to help them differentiate between wants and needs. Tell them that needs are the basic necessities in life such as food, shelter, basic clothing, education and healthcare. Explain to them that wants are the things we fancy like buying the latest iPhone or Louis Vuitton bag. Using your own budget as an illustration to show how wants must have to be set aside first in favor of needs when it comes to spending.
About 70% of Generation Z admits they do not have a clear idea of how to set a budget. And one of the effective ways to teach saving tips for teenagers is to give them insight into the budget of the family. If you have heard of the 50/30/20 rule then this is a stepping stone to teach your teenager child how to establish a workable budget. 50% goes to basic needs, 30% is allocated for personal spending and 20% for savings – this is an easy budgeting guideline which can be followed at any age.
Set Some Goals for Saving
Telling your teens to save without explaining why it should be is pointless. Helping them define a savings goal can be a much better way to get them inspired. If they know what it is they want to save for, help them split their goals into smaller ones. For example if they want to purchase a brand new original Nintendo for PhP6,000 and they receive a PhP1K allowance a week, tell them how long it will take to reach that goal when they save a portion from that weekly allowance, this is a practical saving tip for teenagers.
Your teen may not realize the norm for now but when he gets older, he’ll be happy you encouraged him to save money. He will thank you for doing that to him as there will come a time when he has to face the real need of a bigger amount like buying his car and he has some savings. You as a parent are the key to making sure that your teen is equipped to make good financial choices and a saving tip for teenagers is teaching him to save money while he is young. On the other hand, those parents that simply give money away to their teens for spending are simply making a big mistake.
Have Them Open a Savings Account
As soon as your teens have a savings goal in mind, this is an opportunity for them to store their money. One such saving tip for teenagers is to have them open a savings account at a bank. In this way they’ll be able to see how much their savings are piling up. This will also show how much growth they are making toward their goal.
Getting used to setting aside at least 10% of their money at a savings account will also lead them to creating an emergency fund eventually. With that, they will eventually be able to save for the construction of their first home or set money aside for the “rainy days” to come. You may also consider your kids to set up an automatic saving app, another saving tip for teenagers. By linking their account, your teen child will be have his savings automatically deposited to his account.
Keep a Record of Spending and Saving
A sensible saving tip for teenagers is maintaining a record of spending and saving. Get 12 envelopes and mark them with the corresponding month of the year and ask your teen to save each month’s receipt (from his purchases) in the relevant envelope. By doing so, it will allow him to review procurements, evaluate past buying impulses and analyze when they should have spent money wisely. It will help her improve spending habits in the long run.
It is very important to teach your kids that spending is not always buying things that you want. They must learn that they’ll have to spend money on things they need when they become adults. Make them realize that there will always be a backlash for each choice they make. Personal finance is about decisions, this is a saving tip for teenagers.
Lead by Example
The best way to teach your teens about saving money is for you to save money as well. You should also have a good record of spending and saving regularly. When you are out in the mall or grocery shopping, show them how to distinguish and compare different prices and explain why buying for one item makes a better sense than another. Restate the point that every time you get paid, you save a part of your paycheck for the future, and it's a smart saving tip for teenagers.
If you want your teens to develop good spending and saving practices, they need to see you making smart spending and saving choices, a saving tip for teenagers. Practice what you preach and preach with constancy. If you put in the effort and constantly convey a clear message regarding money, then you will instill good habits that will serve your teens well.
Sow a Retirement Seed
During teenage years, it may not be a top priority yet but just make them understand how saving regularly can make a huge influence in their life for their future. A saving tip for teenagers is that the earlier they acknowledge that retirement is the biggest charge they have to save for, then the better off they will become. The earlier they start saving, the more money they will have in the future. This move might just be the secret key to making your teen into the financially free person that you want him to be.
Introduce them to the magic of compound interest. Have your teen master the mindset of saving for short-term goals into long-term goals, a saving tip for teenagers. Compound interest can bring about huge returns and the earlier you launch your teen to it, she’ll get a boost on preparing for her retirement.
Giving useful saving tips for teenagers could somehow take time on your part and it won’t be that easy. But if you want your teens to know how to properly manage their finances, then it's worth it. Taking the opportunity to teach them now will be worth it. There is no required age to start practicing good money habits. The earlier that they are exposed to it, the better chance they will become financial savvy.
There are many lessons out there which are not about how much money is convenient to you and to your kids. This is a practical saving tip for teenagers. There will always be some mistakes to be committed when they become financially responsible for themselves. Just make sure your teens understand the lesson for the future and as long as they form good habits over time. You will be able to instill the roadmap of a lifelong financial success to your children.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.