It is a component of good parenting to teach children the financial facts of life; how to earn and save money. Children who master wise money management potentially carry those ingrained habits about spending and saving into their adult life.
Easy ways to teach teens to save money:
* Through communication
Talk to your teen about budgeting, saving and earning income. Let your teen know that you work hard to maintain the family in a comfortable lifestyle and impress the importance of the teen obtaining a good education in order to do likewise. Make saving for a family vacation, or a major purchase a family effort. Teach your teen the concept of “a penny saved is a penny earned.” Open a savings account for your teen and encourage him/her to put a portion of allowance and a portion of gift monies into the savings account, where interest will allow his money to grow.
* A penny saved is a penny earned
Let your teen observe your daily depositing change into a piggy bank. Give him a piggy bank and encourage him to put his own loose change into it. Occasionally ask your teen to count up what is in his piggy bank, so that he can see the value of small change. When the bank if full, have your teen accompany you to the bank to make a savings deposit.
* Use incentives
Give your teen an incentive to save by offering to contribute a portion to the cost of a highly desired item. For example, tell your teen that you will match whatever he saves toward a car, and then follow through with your promise. A teen who is approaching his sixteenth birthday might be highly motivated to have his own “Wheels,” and only having to save up half of the large amount required will be a motivating incentive.
* Gainful employment
Many parents are reluctant to allow their teen to work a part time job, fearing the distraction will interfere with studies. Let your teen hold down a job with two conditions: One that he save a portion of his earnings; two that he will be required to quit if his grades slip. Having a part time job is a great way to instill a sense of responsibility and to learn effective money management at the same time.
* By example
Monitor your own spending habits. If your children witness you giving in to every whim, spending recklessly without thought of saving for a rainy day, and otherwise practicing poor money management, they are sure to emulate your unwise attitudes toward spending and saving.
Teaching teenagers to save encompasses many other valuable life lessons, such as goal setting, a sense of responsibility, appreciation for possessions, respect for the role money plays in an individual’s life and so much more.