Yahoo Finance 6 Ways to Teach Your Teen to Be a Saver
With 65 percent of Americans lacking substantial savings and 29 percent of Americans having nothing at all saved, it's clear that we need to be doing better financially, not only to increase our own savings rate but to teach our kids to not follow in the majority's footsteps of putting saving money on the back burner.
Today's teens are only five or fewer years away from becoming independent adults, whether that means getting a job or heading off to college. We'll be doing our teens a big favor if we start teaching them to be savers now, as opposed to letting them flounder and figure out the tough lessons of the importance of savings on their own.
[See: 12 Ways to Be a More Mindful Spender.]
Here are some things you can do to help your teen make saving money a habit and to teach them the value in having a plush savings account available for unexpected expenses.
Make Saving Money a Rule
While your child is under 18, you still get to make the rules that they have to live by. Make one of those rules be that a certain percentage of their earned income or cash gifts goes into a "no touch" savings account.
Your teen might not appreciate the rule now, but we'd be willing to bet they'll be thrilled you forced them to save money when they get older and face a real need for a large amount of cash, such as for a vehicle purchase.
Match Kids' Savings Deposits
Most teens find it more enticing to save money with a matched percentage amount from mom or dad. Choosing to match what your teen saves each month - whether it's a 100 percent match or something lower like fifty percent -- often gives teens the incentive they need to increase the amount of money they're putting aside into savings.
Teach Them How to Budget
By teaching teens the importance of creating a budget for the money they earn and the value of tracking their weekly spending, you give them the power they need to spend their money in ways that are most important to their individual goals.
Have your teen write down what their financial responsibilities (such as auto insurance) are and what their financial wants are (such as money for hanging out with friends), help them determine what dollar amount they need or want for each item and help them to formulate a budget that matches up with their income.
Teach them the importance of including savings in their budget and treating it as they would any other bill that's due. Encourage them to pay themselves (i.e., their savings "bill") first.
When you teach kids how to prioritize and plan for both needs and wants by utilizing a budget, and when they understand the importance of paying themselves first, they're more likely to save, knowing that there is money set aside in their budget for fun stuff, too.
[See: 9 Ways to Invest on a Small Budget.]
Create Other Rewards for Saving
Teens also might be encouraged to save more if parents implement other types of reward programs. Some ideas for savings rewards for your teen can include:
-- Offering to pay for half of their first automobile purchase if they save up cash for the other half
-- Offering to pay for part or all of their college tuition if they can show a consistent habit of saving a percentage of their income
-- Giving them opportunities to earn money by helping around the house, provided the earned cash goes straight into savings
-- Offering financial help with other large expenses based on a savings plan that you create together with your teen
Make Your Teen Responsible for Earning Their Own Spending Money
When teens are given money freely, they often don't see the benefit in saving money. On the other hand, when they have to work for the money they want for social activities, additional clothing outside of the family's clothing budget and other reasons, they begin to see the value in saving for the future.
Instead of simply handing your teen cash whenever he or she wants it, give them opportunities to earn money for spending by doing chores around the house, babysitting or getting a part-time job. Money that is earned is most always more valued than money that is routinely received as a gift. Money that is valued is more likely to be spent (and saved) wisely.
[See: How to Live on $13,000 a Year.]
Let Your Teen See the Benefit of Saving in Your Own Life
If you've developed a habit of being a good saver, share what you're comfortable with about your own financial picture so that your teen can see real-life benefits that result from making savings a priority.
That might mean sharing the balances in your retirement accounts, showing your teen how much you've saved in your emergency fund or sharing how you've been able to pay off or stay out of debt by making savings a priority.
The goal in helping teens to be more excited about saving money is to help them make savings a habit in which they can see the benefit.
By working to teach your teen the benefits of the savings habit, you can help ensure that they'll make savings a priority in their own lives.
Deacon Hayes is a financial expert and founder of Well Kept Wallet, a financial education company that provides personal finance curriculum for people across the world.
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