Teaching Teens to Save Money

Teaching teens to save money can be greatly simplified if you understand the natural tendency of most teenagers is to spend everything dollar they get from their parents, work, or as gifts.

Not all teenagers are spenders, but keep in mind this newest generation of teens is bombarded more than ever with advertising and peer pressure to live up to the standards of being "cool". This often involves a large outlay of cash to keep up with the latest trends.

To teach some real lessons to your teens on how to control spending use big-ticket items like a car as a starting point for instilling good values when it comes to saving money. Your teen needs to know the true cost of owning and operating an automobile. Don't let them get a warped perception of the costs because of your subsidies for gas or insurance or repairs.

Bailing Them Out Can Be Costly

The first rule of teaching your teenager to save money is to think long and hard about bailing them out of what they may perceive as financial difficulty. Say, for example, your teenager wants to go to a show when their favorite band comes to town, but doesn't have the money for a ticket.

Do you open your wallet? No, if you do you send the wrong message about money, saving, and financial responsibility. Yes, it may cause a bit of disruption in the household, but hold firm, in time this will pass. Your teen needs to learn to plan ahead and save for future needs. This is an important lesson that many adults have yet to fully understand and appreciate.

Independence and Mobility

The car is one of your greatest tools when it comes to educating your teen about saving money. At a certain point, usually as soon as they are legally able, every teenager will want to learn to drive, and eventually own car. Some parents will buy their teen a car outright, in exchange for some vague "good behavior" promise for the future.

Obviously, this doesn't work as a viable method of teaching teens to save money and isn't reflective of the real world. After all, you don't get hired for a new job and immediately get paid a full year's salary in advance in the hope that you’ll show up and be productive. Well at least not unless you're a professional athlete.

You should make your teen save for a car, even if you can afford to buy one. Rationing the use of the family car in exchange for real tangible work by your teen, whether it be participation in a sport, attaining a certain level of success in school, or putting in a certain number of hours on a job, can all begin to build in your teen the relationship between work and reward.

The teenage desire for independence can be a great ally in teaching good money saving habits. Teenagers often only think about the positives of independence, without considering the hard work and self-support required to attain it, as a parent you need to constantly remind them.

Allowance vs. Job

There are two schools of thought on using an allowance or a job to teach teens to save money. First, if you have the means and you plan to have you child put maximum effort into junior high and high school, both in academics and athletics, you may opt for an allowance based on specific things your teen must accomplish at home and at school. This can be the right course of action for certain kids.

The other school of thought would be to encourage your teenager to find a part-time job during the school year and full-time work during breaks. This will help them understand the relationship between work and money through real-life experience. You may need to do more than encourage a teen to get a job, and this may seem harsh, but some teenagers don't seem to get very motivated to do something unless they know there is a deadline and consequences will result from non-compliance.