Your teen might be doomed in college if they don’t have fundamental money management skills. They’re suddenly faced with a new, pricey environment, and won’t have the Bank of Mom and Dad to cover every cost. We think that the key to being more financially independent is to learn how to save money, which you can help your teen understand before they get to college. These are our top four methods for teaching your teen how to save.
Getting a Job
The most obvious tip is to have a steady source of income. If you help your teen get a job, they can gradually build up their savings account or invest their money. Plus, with more income, they’ll have more freedom to spend their money without hurting their life’s savings. When they spend a little on the items they want and save the rest, they won’t feel like they’re missing out by choosing to store part of their paycheck in the bank for the future.
You can help your teen how to get a job by showing them the fundamentals for constructing a resume, offering to drive them to the mall so they can get a pile of applications, or introducing them to a friend’s business that might need some entry-level help. It’s great to assist your teen in finding a job so they get excited about working instead of being disheartened by an unproductive job search.
The awesome thing about having jobs in high school is that once your teen gets to college, they will have a stronger resume that will help them access even more jobs. This way, they can continue to have a balance between school and work, making money all along the way. Another bonus is that having a job in high school can make your teen a better college candidate since universities look for well-balanced students who know how to work hard and take initiative, which an after-school job can offer.
Stop Buying Everything for Your Teen
When your teen is in college, they will have a lot more expenses, so it’s good to teach them how much they might have to spend by having them buy their own stuff while in high school. You could start by telling your teen that they are responsible for paying for their phone bill, their car insurance, and gas, or new clothes. This way, your teen will make a connection between saving money and being able to access the things they want and need as their brain develops. Your teen will need decent savings to account just to budget for their daily life, so they will actively think more carefully about what they decide to spend on money on.
This trick also helps your teen understand the true value of things, including the value of a dollar. They might be more appreciative of what you spend on them after learning how expensive it is to always buy what you want. When your teen is confronted with decisions about what to invest their money in, they will begin to realize that they don’t really “need” everything they “want.” Instead, they will be more money-conscious and learn to only spend on the most important or most necessary expenses. If they want to splurge, they’ll need to make more income.
Introduce Your Teen to Your Budget
It might be influential to show your teen your own saving and spending habits. Show them how much income your family needs to sustain itself, how much of the money is budgeted to different costs, and the importance of saving money for a rainy day. This will probably be eye-opening for your teen and might inspire them to start saving for their own bills in the future, like rent and groceries.
This is also an opportunity to show your teen how to budget for big-ticket items like a family vacation or a new car. By demonstrating how much time it takes to save to make a major purchase, your teen might relate the advice to their own life. Reframing saving as budgeting for a big purchase might prevent your teen from bad decision making with their money. You could try telling them that if they want the newest smartphone or a high-end instrument, you can make a budgeting plan together so your teen doesn’t wipe out all of their savings at once on a single item.
Take Your Teen to the Bank
A lot of teens don’t know the ins and outs of having a bank account, so it could be helpful to take them to your local branch. Sit down with a teller or bank representative and ask them what the best account would be for an incoming college student, and if they offer any special promotions or deals for that demographic. A lot of major banks have special deals for students! After deciding on the best bank account, your teen might want to ask questions about interest, automatic payments, digital budgeting services, and other features your bank offers.
Banking is also a lot easier with the help of mobile apps, which might be a great way to get your teen to routinely check their balance and spending habits. Encourage your teen to download their bank’s app and use its services to gain insight about what they spend money on and how quickly they spend their money so they can be more conscientious about how to build savings. This way they will be less likely to lose track of their spending and go over budget on accident, which is a great skill for maintaining good savings habits for college.
Practice Makes Perfect
The more your teen can practice these fundamental money-saving skills in high school, the better prepared they will be for college. It’s never too early to start teaching your teen about money, so we highly recommend that you try these techniques as soon as possible to have the greatest effect.