7 Saving Tips for Teens
Why is it that even though your teens work part-time jobs, their money seems to disappear almost before it arrives? Here’s how to help kids beat those “broke-again blues” and hang on to their hard-earned cash.
1. Set savings goals.
Let’s face it: There’s not much motivation to save for the sake of saving. The key is helping teens figure out what they’d be willing to delay gratification for. Maybe your son feels a reliable car would help his social life, or he wants a soon-to-be released smartphone. Discuss goals with him, write them down together and commit to making them happen.
2. Build a budget.
Explain that a budget is like a GPS teens can use to navigate towards their goals. They can think of the first step as taking a kind of selfie of their finances by subtracting all fixed monthly expenses from income. The amount that’s left shows the maximum they could potentially save each month. Next, your teen can factor in optional expenses, such as concert tickets and taco runs, to get an idea of what they might realistically aim to save.
3. Open a savings account.
Since you’re discussing budgeting and saving, this would be the perfect time to introduce your teens to the benefits of compound interest. By opening a savings account at a financial institution like The Cooperative Bank of Cape Cod, you can let them see how their money grows over time when the interest they earn on deposits gets added to their balance and then earns interest of its own. By downloading the bank’s app to their smartphone or device, they can also get introduced to the mobile banking, which is how their generation of millennials is likely to do much of its banking.
4. Pay yourself first.
Even if your daughter hardly has any cash left over each month, encourage her to make savings a priority by paying herself before spending on anything else. See if it’s possible for her to directly deposit part of her pay into a savings account.
5. Track spending.
Where exactly is all your teen’s cash going, anyway? You’ll never know if you don’t investigate together. Find him a spending journal or introduce him to budgeting apps that track spending. You can then help him adjust his budget to increase the amount he can contribute to savings.
6. Shop smarter.
A few simple measures will stretch the dollars your teen does spend considerably. Educate her about looking for sales and searching online for coupons. Take her along as you comparison shop for the best deals and ask retailers if they’ll beat a competitor’s price. At the cash register, find out if student discounts apply.
7. Carve your own path.
Following the crowd has all kinds of downfalls, not the least of which is financial drain. It literally pays for teens to resist the urge to buy into every new trend and only purchase what truly serves them as individuals. Not only will they become a better savers: They might set a savings trend that everyone around them begins to follow.