Teaching Your Teen to Save
Teaching Teens Money Management - Summer Job, Summer Savings
For many teens, summertime means earning extra cash from a summer job.¬†It is also an excellent opportunity for¬†parents¬†to teach their teen another valuable life skill. Encourage your teen to develop the good financial habit of saving money.
Get your teen off to a good start by helping them open a credit union savings account.
Since credit unions are member-owned and not-for-profit, you will find higher interest rates paid on savings accounts,¬†lower interest¬†rates on loans, less fees, and more free services compared to banks. Set¬†your child up for lifelong success by giving them the gift¬†of membership at your credit union. This membership will be beneficial as they grow into adults and work to save money, establish credit, buy a car, and purchase their first home.
Set aside a percentage of their paycheck for saving.
Discuss¬†what amount or percentage of their paycheck¬†should be¬†reserved for saving. Stress that saving money is a priority. So they should¬†set that money aside¬†first¬†before using the remaining funds for other activities and expenses. If your teen's employer offers direct deposit, it can help¬†to designate a portion to be deposited right into their savings account. If your teen receives a paper check, they can deposit a portion to their savings and request some cash back.
Establish financial goals.
Now that they are earning their own income, your teenage may have their eyes set on a major purchase, such as a new bike, gadgets and tech, or even a car. Speak with your teen about their goals; get them involved. Teaching them to save for¬†a major purchase will instill in¬†the good¬†habits and patience that will help them avoid unnecessary debt as an adult.
If they have multiple things they would like to save up for, their credit union can help. For example, FiCare offers a variety of savings options, including¬†regular, secondary, holiday, and vacation savings.* These different options can help¬†your teen organize,¬†separate, and track how much they have saved for a specific purpose.
Give your adolescent an incentive to save.
Incentivize saving money is by matching your teen's deposits up to a certain percentage. Perhaps you could agree to contribute to the cost of a major purchase if they save up a certain amount first. You could offer a bonus if they achieve and maintain a certain balance in their savings account. Get creative to make saving money fun and rewarding.
Learn more about the variety of savings options offered by the credit union and options available to children and teens.
*Savings accounts have activity restrictions and may require a minimum balance to earn the stated Annual Percentage Yield (APY). See our savings page or contact us for details. Federally insured by NCUA.
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