Putting money away in a savings account is difficult for many Americans. Teaching your children smart money habits early on will set them up for success as adults. But encouraging a savings habit can be challenging when popular culture and media promote spending and a “you need this” mentality. They do not need to have the last word, however.
Here are some ways to persuade teens to save:
1. Match Their Savings Deposit
Anyone would find it more appealing to save money if they received a dollar-for-dollar match! Even a 2-1 match is a good deal. Offering a monetary incentive to save creates competition for your teen’s dollars.
2. Bring Other Incentives to the Table
Discuss some of the costs associated with adulthood, such as car expenses and college tuition. Be frank about what you can offer and what you expect your teen to cover. Then incentivize good saving behaviors:
• Offer to pay half for a first automobile if your teen saves up for the other half.
• Offer to pay for some or all college expenses if your teen can show a consistent savings habit based on a percentage of income.
• Offer opportunities to earn money by helping around the house, provided the earned cash goes straight into savings.
• Offer financial help with other large expenses based on a savings plan that you create together.
3. Combat Bad Spending Behavior
What good is incentivizing good savings behavior if your teen continues to spend mindlessly? For these teens, finding a job is the best corrective. Money they earn is more valued than money given to them. Jobs also give them opportunities to interact with others in the workplace and learn to keep a schedule.
Encouraging your child to save and spend wisely is best practiced early on. Teach the importance of delayed gratification and the satisfaction of having a growing savings account, which can help them feel more secure. Modeling smart saving/spending habits will show your teen the rewards that come with being money smart. Talk to them on how you make spending decisions or save for future expenses. Discuss debt too, and give examples of how you spend down or avoid debt. This is one of the most important educations your teen will have.
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