Did your parents teach you about saving money when you were younger? Like most of us, you had to learn some valuable financial lessons the very difficult. Fortunately for your teen, he can benefit from your hard-earned lessons and know how he can save money for big purchases or for his future plans.
Helping him to get started may be easier than you think it is. We’ve got a few helpful tips to get you started.
Paycheck versus expenses
Your teen shouldn’t have too many expenses he needs to be responsible for weekly and monthly. Sit down with him and look at how much his take-home paycheck is. He may have questions about the amounts taken out for tax and other withholdings, so be sure to help him understand these deductions.
Understanding his average take-home amounts, you can now determine how much he will need to budget for ongoing expenses. This could include paying for gas for his car, a portion of his car insurance, a monthly video game expense, a music subscription, or an activity he enjoys taking part in every week or so.
Your teen should have enough incoming cash to cover his outgoing expenses. This is an excellent opportunity to discuss his options if he doesn’t. Could he take on a few more hours at work or look for another job that offers better pay? Is there room for your teen to cut back on his expenses?
He won’t be in a good position to save anything if he’s going to be coming up short every time his bills are due.
Ensure your teen has both a checking and savings account
Direct deposit into his checking account is the easiest way for your teen to get his paycheck. Many direct deposit accounts allow you to set up a savings account. This makes it easier for your teen to transfer a set amount into his savings account with each payment.
In many ways, an auto transfer can make saving much easier for your teen. Too often, his paycheck will be spent before he knows it and before he has time to think about moving a portion of it over into his savings account if its not automatic.
As with many of us, your teen may not know where all his money is going. He puts gas in his car, grabs lunch with friends, swings by for a new pair of socks, and perhaps doesn’t even realize how much he’s spending. Many apps can help with tracking spending, but your teen’s checking account may also offer an excellent function to help him figure out where his money is going each paycheck.
To know how he can better save, your teen should understand how his spending habits impact his goals and his ability to save. This is also something that you could do yourself with your own paycheck. Where you see possible areas for improvement in your spending, you can offer tips and helpful guidance to your teen.
Some teens may find that spending cash versus using their debit card helps them to control and track their spending better. Just keep those coins in a jar to be cashed in at the bank later!
Creating a realistic budget and setting goals
Now your teen understands his expenses, and he recognizes just how far his paycheck can extend. From this point, he can start to understand how a realistic budget can help him to meet his goals. Work with your teen to figure out what is important to him, perhaps buying that first car, and establish a timeline to help him achieve that goal.
Teens can get easily discouraged if they think things will take too long to make a reality. This is why it’s so important to set realistic expectations and goals with your teen every step of the way. You may be able to match his savings contributions, which could help him to see faster and better progress.
The perks of comparison shopping, savings, and coupons
Let’s face it, coupons don’t have that trendy vibe most teens are looking for. However, if your teen is serious about his money-saving goals, it is worth mentioning the various ways he can save money. Coupons, shopping sales, comparing prices at stores.
This may be tiresome and frustrating, but the truth is that there is the potential to save a significant amount of money just by taking some time to do these things before making a purchase.
Shopping for the best car insurance rates could save your teen hundreds of dollars off a policy. A bit of comparison shopping for jeans could help your teen pay half of what he would otherwise pay for the same garment. Many places off student discounts, so get your teen in the habit of asking.
Many apps offer coupons, which is great for a bargain-savvy person. Your teen may not always be interested in finding the best deal, but it’s a good habit to start and keep up with as he considers his budget and savings goals.
Part-time jobs, side-gigs, odd jobs, and more
Your teen’s income may come from his after-school and weekend part-time job. But there may be other ways that he can increase his income. Neighbors may be looking for someone to mow their lawn, take trash cans in and out on trash day, walk the dog, or wash their car. If your teen gets the word out that he’s looking to earn a bit of extra money to put into savings, he may be surprised at the interest he gets from family, neighbors, and friends.
Learning financial responsibility at an early age is critical. Your teen will benefit from learning how to save money and boost his income to meet his goals. That said, be sure that he’s still having fun. The teen years should be about learning those valuable life lessons, certainly. But they should also be about learning how to enjoy your hard-earned money and just enjoy being young and carefree. Perhaps you and your teen can take in a movie together, go for dinner, or look for no-cost activities that you both enjoy.
If your teen is struggling or in crisis, you don’t need to work through the difficulties alone. There are always available resources that can help you both. At HelpYourTeenNow we pride ourselves on being able to provide a link to the resources that parents and teens need as they navigate the tumultuous years between tween and adult.