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Encouraging a teenager to start saving more is easier said than done. At this stage in their life, they are trying to find their identity and that makes them want to be more independent of you. Of course, that does not include your finances. They will continually want you to support them financially even if they are making you feel like they do not want you to meddle in their personal affairs.
As painful as it may seem, you need to get used to the idea that your child will start to affirm their independence from you. Instead of fighting the inevitable phase of letting go, you have to start educating them about financial habits and issues. Some parents do not agree that it is wise to tell kids about your financial situation. While it is understandable that parents want to shield their kids from financial stress, it is not always wise to do so. They need to learn how to manage their finances because they will soon be making their own financial choices. You want to be there to instill in them the right financial habits that will help them grow their personal wealth.
According to a study published on FinancialEducatorsCouncil.org, young adults feel like money management lessons in high school would have helped them the most in life. The council surveyed young adults and they reveal that 51.4% believed that financial management would have helped them make better money decisions in life.
Having adequate knowledge would prompt you to start saving more, spend less on unnecessary things, and to invest in your future. If this is your sentiment, then your teenager will feel the same way in a few years time. You have to equip them with the financial knowledge that will keep them from making financial mistakes – like borrowing too much student loans
4 ways you can push your teen to save more
In an article published in Time.com, statistics reveal that more young adults are living with their parents and grandparents. These are the people who want to be more financially established before they move out on their own. While this may indicate a growing trend of close-family-ties, it might not bode well for your finances as the parent. You want your children to be financially independent as soon as possible so you can concentrate on preparing for your own future – which is retirement.
The only way that you can push them to be financially independent is to groom them to become smart managers of their money.
One of the first things that you need to teach them is to start saving more. Here are 4 ways that you can help your teenager develop the saving habit early on.
Encourage them to set goals. A goal is the best motivator to save more money. Guide your teenager and ask them about their future goals. What would they like to be in the future? This might be a bit tricky because some teenagers can be confused about what they want out of life. You can blame their hormones for that! They are torn between their child-like tendencies and their growing need to find independence. They might not be able to give you specific goals yet – and that is okay. Just ask them about what they want to accomplish in 5 years – or 10 years. Start the conversation and encourage them to make their goals more specific and concrete. With your guidance, they should be able to look deep within themselves to set the goals that will motivate them to put aside money for the future – for their college education.
Make saving more visual. The general practice is to put the saved money in the bank. In a way, this will keep your teenager from spending it unnecessarily. However, putting the savings in the bank removes the feeling of accomplishment as you watch your savings grow. You may have to make saving more visual for your kid. A savings jar might be the solution. Make sure this jar requires breaking before one can take out money from it. This will discourage your teen from taking money from it. As they see the money more, this will encourage them to start saving more. This is also something that you can use to convince the whole family to save – not just your teenager.
Have them track their spending. As part of their financial lesson, you can push your teenager to track their spending through a diary. Try not to cringe as you see their expenses – especially those for entertainment and unnecessary stuff. Be gentle in teaching them the value of smart spending. Have them realize their mistakes and lead them through example. After all, what you show them is more influential than what you tell them.
Teach them to earn money. Finally, you have to teach them how to make their own money. Encourage them to get a part-time job during the summer. If you have your own business, hire your teenager and give them real responsibilities. Pay them a salary and allow them to help out in the family business. You can also teach them to earn online. If your child is a talented writer, you can help them set up an online freelancing career. Or you can help them set up a yard sale so they can sell the possessions that they no longer use. Give them the freedom to decide what they will do with their earnings but make sure to remind them to start saving more.
Why parents play an important role in a child’s financial education
JuniorAchievement.org published the results of a survey they did about teens, parents, and their financial situations. The survey revealed that 84% of teens look to their folks when it comes to money management tips. No matter how rebellious teens may be, you need to understand that this is a crucial time to teach them the right financial habits that they will carry with them as they go off to college. Here are some of the reasons why parents play a big role in shaping the financial literacy of their child.
- Your kids respect and trust you. Let us start with the respect that they have for you. This makes them trust you with everything that you say. Use this power to influence them to make good financial decisions in life.
- You are the best person to understand what they need. Apart from the respect, you are also the best person to know what they need in life. After all, you help usher them and mold them to fit into society.
- You can easily influence and shape the future of your kids. The combined knowledge about your child and the way they respect and trust you increases the influence that you have on them. If your own parents did not teach you money lessons, then do not do the same to your child. Make sure you complete their education by instructing them about how they can start building their financial lives.
Common questions about personal savings
Question: Why is personal savings important?
Answer: Your savings is the ticket to your financial wealth. It will help you cover unexpected expenses and it can also finance any investment that will allow you to grow your current net worth.
Question: How can I create a personal savings plan?
Answer: Start by setting goals. You can identify the target savings amount and the actions that you need to complete in order to reach your goals. The details can be placed in your personal savings plan.
Question: How much personal savings should I have?
Answer: This will depend on your lifestyle, income, and financial goals. Some people are happy with a small savings amount because they have amassed assets. Some want to have cash in the bank. The latter would definitely require you to save more money. It all depends on what you think you will need in the future.
Question: What are personal savings used for?
Answer: There are many uses for your personal savings. It can help finance your education. It can help you start your own business. It can also be used to pay off debt. Probably the most significant use of your savings is during emergency situations.
Question: Should I invest my personal savings?
Answer: Yes. But that would depend on your risk tolerance. Make sure that before you invest, you set aside a portion of your emergency fund to remain as cash. The rest can be invested so your money can earn through compound interest.
