14 Easy Tips To Save Money As A Teenager
These simple ideas can encourage your teen to develop the habit of saving money.
Specialty: Psychiatrist, motivational speaker, writerExperience: 15 yearsDr. Maymunah Yusuf Kadiri, popularly referred to as ‘The Celebrity Shrink,’ is an award-winning neuro-psychiatrist and mental health advocate with over 15 years experience.She is the medical director and psychiatrist-in-chief at Pinnacle Medical Services.
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Once your child has reached teenage, where they are old enough to handle money responsibly, they should be taught how to save money as a teen. Many teens receive an allowance from their parents, while some work a part-time job. Regardless of the source, inculcating values regarding saving money and wise spending will benefit them in the future.
Having a reserve of money prevents financial crises and helps you grow into a self-reliant individual. It also motivates you to set goals for a better future. Read this article to learn how to teach your teen some ways to save money.
14 Tips To Save Money As A Teen
Teach your teen the following tips on saving money to help them gain experience and confidence.
1. Ensure your teen has a steady income
First and foremost, help your teen establish a steady source of income. Encourage them to find a part-time job or start a side hustle that suits their skills and hobbies. If they have limited time due to their interest in sports or other school activities, offer them a weekly or monthly allowance, and encourage them to save a portion of it.
2. Help them manage their spending
It is important to spend money wisely. Help your teens understand the difference between their needs and desires. They should give primary focus to their needs and learn how to cut down unnecessary expenditure.
3. Open a savings account
Opening a savings account at an early age would go a long way in teaching children about managing money. They will learn how to make deposits, save money, and track their bank balance. You may also link your account to theirs to keep track of the money.
4. Set up a budget plan
Spend some time with your teen to discuss and set up a budget suitable to their income. It will help them get an idea of how and where to spend money. Having a realistic budget plan will help them set short-term and long-term financial goals. You may also spend some time with your teen to evaluate their actual expenditure and compare it to their planned budget.
5. Allow them to make mistakes
Adolescence is considered the perfect age to learn and grow. While managing their finances and saving money, they may commit errors, both big and small. But these will help your child learn valuable lessons. So, support them when they commit financial errors and help them learn from those mistakes.
6. Help them become a smart shopper
When you go shopping with your child, teach them about buying valuable products at the best price. Comparing products based on their value is another way to become a smart shopper. It is also important to make a priority list of things – items that need to be bought immediately and rest that can wait.
7. Cut back on irrelevant expenses
Help your child understand the importance of relevant and irrelevant expenditure. Avoiding irrelevant purchases can help them save money. For example, when you go out for a movie, you can teach your child to carry healthy snacks from home rather than buying expensive junk food. As they say, every penny saved is a penny earned!
8. Teach them to use credit cards responsibly
Credit cards have both merits and demerits. Teens may not understand the risks of using a credit card. Thus, it becomes your responsibility to help them understand how to use credit cards wisely. You can monitor their spending and make them accountable for every purchase.
9. Set a good example
Children tend to copy their parents in most aspects of their life. Thus, set a good example by making informed buying decisions, planning and spending wisely, and being prudent with money. They will imbibe what you practice in your life.
10. Explain to them the basics of insurance
If your teen owns a cell phone or laptop, teach them about the importance of insurance. Explain the purpose of having insurance coverage, and discuss the policies with them in detail. This will also help them in understanding how to care for their belongings or assets.
11. Let them pay the bills
This is an important lesson teens can learn early on in their lives. It will not only help them in analyzing their expenditure but also make them more responsible. Whether it is their phone bill, internet bill, or even fuel charges, let them take charge of their expenses.
12. Help them in making investments
Money management also includes making investments. Teach your teens about saving a part of their money every month. Then, explain where they can invest this savings amount to get a fixed and safe return. You can guide your child in researching and picking the best investment options available.
13. Make them aware of debt
Being in huge debt is similar to being in handcuffs. Many teens get into debt when fulfilling their wants. Educate them about the consequences of borrowing money or using credit cards irresponsibly.
14. Recommend retirement savings
This can be a long-term goal, but there is no harm in starting early. Retirement funds are a crucial part of anybody’s life, and thus, teaching them to allocate savings appropriately can set them up for a secure future. For instance, they can set aside a sum of money to be invested in retirement funds each month.
Frequently Asked Questions
1. How can a teen spend money wisely?
Useful measures for teens to spend money smartly and wisely are (1):
- Figure out what is important and what is not.
- Think of alternatives when spending money. For example, a get-together at your home instead of a movie or pizza outing.
- Try out different budgeting techniques such as saving first or using the 50/30/20 rule (50% of income to be spent for your needs, 30% for your wants, and 20% go into savings).
2. How much money should a teenager save?
Once a teenager has stable earnings, they should target to save at least 10% of what they earn (2).
3. What are the reasons to save money as a teenager?
It is important for teenagers to learn to save money as it teaches them (3):
- To value money and understand that it is a limited resource
- To spend only on things they can afford
- To handle emergency financial situations from an early age
Teenage is when your child begins to take on more responsibilities and appreciate being treated like an adult. Thus, teaching your youngster how to save money as a teen will go a long way and be a big step toward a stable financial future. You can help them set up a budget and give them tips on cutting down on unnecessary expenses. At the same time, give them room to make mistakes so they can learn by themselves. They will appreciate these lessons and thank you in the future.
Key Pointers
- Having a savings account and teaching money management can help teens save money.
- Ensure that your teen has enough money for living expenses and teach them to shop smart.
- You may let your teen pay bills and teach the importance of budgeting.
References
- Spending for Teens.
https://www.kidsmoney.org/teens/spending/ - Teenagers and saving.
https://www.consumerfinance.gov/consumer-tools/money-as-you-grow/teen-young-adult/explore-saving/ - How to teach teenagers about money.
https://www.moneyhelper.org.uk/en/family-and-care/talk-money/how-to-help-teenagers-manage-their-money
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Read full bio of Dr. Maymunah Yusuf Kadiri
