Published by Teresa Milner
Calling all parents of teenagers – Let’s be proactive and teach our teens to NOT follow the majority of Americans when it comes to saving! We can teach our teenagers to be managers of their money and learn effective money skills. Over 10.4 million people are millionaires in the U.S.* – do you want to help your teen be one of these? Help your teen to dream big – identify their next step, and always have their next goal in sight.
Did you know that over 65% of Americans lack substantial savings and 29 percent of Americans have nothing at all saved? **
What’s the cause of this?
- Historically low interest rates?
- Don’t prioritize by paying themselves first?
- Americans don’t make saving a “budget” item?
- They aren’t able to let go of stuff? (latte, iPhone, etc.)
- Some Americans don’t participate in company offered plans?
Your teenager is only five or fewer years away from becoming an independent adult. Whether they are going off to college or getting a job, you can do your teen a big favor by teaching them to be a saver now. Below are six examples of ways to get them going down the right path:
Making Saving Money a Rule – While talking with a female stakeholder at our office, she explained to me the saving habits that her parents had instilled in her while growing up. She is one of the most disciplined young savers I have ever met – and leaps and bounds ahead of her peers in her financial literacy. While she may not have appreciated the rules when she had to contribute part of her birthday cash into her No Touch Savings Account, she certainly does now that she’s out on her own.
Teach Your Teen: Pay Yourself First – It’s easy to “find” other ways to spend their money. Teach them that contributing to their savings should be a priority in their budget. It’s too easy to push off saving when they want to buy the latest electronic gadget or fashion shoes – help them make paying yourself first a habit.
Match Your Teens’ Savings Deposits – This may seem quite enticing to your teen. The amount you match is clearly up to you, but this will incentivize them to increase their savings.
Match Your Teen’s Roth IRA Contributions — If your teen has earned income, they can open their own Roth IRA, and you can match their contributions into this account too. This is a great teaching opportunity to get them into the habit of participating in a retirement plan, and they will be ready when their future employee offers them a retirement plan with a match.
Help your Teen Develop a Spending Strategy – In other words, break down their spending into easy-to-understand categories; i.e., a budget. Writing down where their money is coming from and where it is going will teach them how to live beneath within their means, and not above.
Set an Example – You’ll know when your teen is ready to know more about your household finances. Whether you started early or later in life, the ability to demonstrate how you saved will help them see the value. If you started early, they will learn the value of compounding over time, and how the more time you have, the less money it takes. If you got a late start on saving, they will learn how much more it takes, but that it’s never too late to save.
Is your teenager going to be standing in the crowd saying, I’m glad I did, and not I wish I had? With guidance and help from you, let’s get them going so they will be glad they did.
*CNBC.com, March 2016
**U.S. News, Why Our Savings Rate is Falling, July 15, 2015
