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Do you remember when you were 16? You were probably excited to get your first car or were busy trying to get the attention of your crush. Or, you might also remember that time when you “accidentally” set fire to the school cafeteria after a food-fight that went horribly wrong and got suspended for a whole month (perhaps even a police record). Ok, well maybe that last one was just me.
But do you also remember the money lessons that your parents taught you at that age? I bet most people won’t even remember words of wisdom imparted to them by their parents at that age—let alone, on finance-related matters.
Now that you’re the adult and raising your own teenaged child, it might be a good idea to sit down with and share with them some “magic” words of advice that would encourage them to starting being more financially responsible adults. If you’ve taught them financial skills as kids, then good for you! This is a good time to reiterate those lessons to them, especially since they’re already on the cusp of adulthood and may already be preparing for a more independent lifestyle.
The Joneses are Broke. Don’t keep up with them
So many people try to acquire so many things—regardless of whether or not they could actually afford them—just to keep up with their peers or public figures they look up to. They see others in their big houses and flashy cars and they think “I want to be like that!” Your teen probably thinks the same way now and it’s quite natural at this stage. You should point out that appearances can be deceiving.
Not everyone who owns a flashy car is truly happy. Those who live in big houses are also faced with hefty monthly bills to keep the heat running. Your child needs to learn that they don’t have to keep up with others and that they should focus instead on establishing a bright financial future for themselves. This means avoiding expenses related to acquiring things for the sake of public appearance.
Never want more than you need
The lesson of wants and needs are concepts kids are made to understand ealy in their childhood. The lesson becomes more crucial to teenagers, who usually want the latest gadgets, fashion, and other things teens usually spend on. If you’re getting them a car for the first time, they may want the fancy one when all they only really need is one that gets them from point A to B safely, and one that doesn’t require them to spend a lot for gas. Emphasise that they should never sacrifice their needs in lieu of their wants and encourage them to earn or save up for the things they want.
How you Spend Money says a lot about you
Teach your teen the importance of having a budget and sticking to it. Encourage them to be responsible and accountable with their spending and let them see how rewarding it is to postpone instant gratification from impulsive shopping.
Show them how to plan their expenses so they don’t spend more than their allowances or income, if they’ve started working part-time jobs. Kids being tech savvy these days, encourage them to download budgeting apps to help them set and meet their financial goals.
Even in Saving, Slow and Steady Wins the Race
If your teenager has started earning money through a part-time job, tell them to set aside even a small portion every payday, and that to set aside savings first before they budget the rest for their expenses. Your teen can already open a savings account to make regular deposits easier. If your child’s employer already offers a 401K plan, then you should also encourage your child to sign up for this especially if the employer matches the contribution so that their retirement account earns more.
Compound Interest is your Best Friend
The benefit to your child saving early is that they can earn more money down the road through the wonders of compound interest. Knowing that their money could earn more in the future if they saved it now could help encourage your child to save now. Expain to your teen what compound interest is, and help your child look for a deposit account that helps them earn the most interest. Talk to the bank representative to help you find the one that will let them earn the most interest for long-term deposits. Your bank representative could discuss with you the features of different deposit accounts and help you compare the interests of time deposit accounts and regular savings accounts.
Nothing is more satisfying that a Great Bargain
Comparison shopping is a great way to save money. There are many comparison portal sites out there that can help you compare products and services so that you can get the best deals and find out about special offers on whatever you plan to buy. There are also comparison sites that help you compare financial services like deposit accounts so that you can find one that offers the best interest rates for your child’s savings. Your teen could save more money by comparing prices online before they buy anything especially big ticket items.
Learn to Cook: it’s the Only Way to a Man’s/Woman’s Heart
At this stage in your life, your teen will already have a clear idea of what traits they look for in members of the opposite sex. They may already be going steady with someone special. Going on dates could be quite costly and can make it difficult for your teen to save money. Encourage them to learn how to cook—a skill that will not only help them save money as opposed to buying expensive meals, but which would also surely impress their friends and whoever else they want to impress.
Value Experiences Over Material things
You know the saying “the best things in life are free”? This is the most important financial lesson you must impart to your teen. The fact that they have the choice to save money instead of being forced to pay bills and debts because you have taught them the right financial lessons as they’re growing up is one reason for them to be happy. Spending time with friends and family or being healthy enough to go to work every day are much more valuable than money and are much less expensive than finding happiness through material wealth. Of course, the best way to teach them this lesson is by showing them. Actually spending time with them or simply listening to their stories, can help them see great valule in relationships and living.
Now Be the Example and Live Out These Bits of Savings Advice for Your Teen
The best way to teach your kid how to save is to show them by example. Take them with you to the bank when you make a deposit, cook food for them, and explain to them that you’re cooking dinner because it’s much less expensive than going out or buying takeout food. Show them that you do your research first by checking the prices of stuff online and comparing prices before buying anything expensive. By talking to them and being a good example, you become the model for your child and the way you handle money becomes their habit as well.
Share these saving tips for young adults and see your teen grow up to be responsible financially. If you succeed in teaching them these money lessons, you can rest assured that your child will have a stable financial future.