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It is important to encourage your teens to save money. This can be a difficult process because teens have difficulty delaying gratification. However, teaching your teen to save will help them to learn necessary and important money management habits. Here are five easy ways to help your teen to save money.
First, you should encourage your teens to put a set percentage into a savings account. This should be a more permanent savings account that they can use towards college expenses. This long-term goal will help them have a good start and give them a sense of ownership when it comes to attending college.
Second, you can offer a matching program for any big purchases that they are planning on making. You may offer one dollar for every two they save or you can do it dollar for dollar. This can be done similar to the way that your employer matches your contributions to a 401(k). This method encourages your children to save towards large goals like purchasing a car and makes it easier for them to reach their goals
Third, you should consider having your teenagers set up and IRA account. If they start saving for retirement now, they can take advantage of compound interest. They can open up an IRA if they have at least $1000.00 in taxable earnings and they cannot contribute more then they make each year.
Fourth, you can teach your children frugal money saving habits by giving them an allowance for their clothes and other personal care products. In order to make this work, you cannot bail them out if they run out at the end of the month. This will teach them to shop carefully and plan wisely.
Fifth, teach your teenager how to invest their money. You may want to start by having them pick stocks or mutual funds and following them for a while to track how they are doing. This will show them the risks and benefits that come from investing. You may take this a bit further by giving them a set amount to invest in the stock market. Then you track the investments together to see how they are doing.
