Teaching Teens to Save While They Work

Date July 24, 2014

Teens may have fewer financial obligations than adults, but that doesn’t mean youngsters should shirk responsible financial behavior. More than three-quarters of teens – 77% – feel confident in their money management skills, but when it comes down to specifics such as keeping track of a checking account or a grasp of income taxes, many don’t have a sufficient understanding of personal finances, according to a 2011 Teens & Money survey by broker Charles Schwab Corp. Only 35% said they could balance a checkbook, for instance. Your teen’s summer job offers an opportunity to learn saving strategies and good habits that can last a lifetime.

Six steps your teen should learn

 Lecturing teens on the value of money only takes them so far. More understanding comes with learning how to apply the following practices:

  1. Setting Goals – Have your teen set a tangible savings goal. Whether it’s a contribution towards college costs or a new car, coming up with a lot of cash takes time and patience. Help your teen figure out how much to save, and consider adding an incentive, such as providing a matching sum each week. 
  1. Budgeting – Help your teen create a budget to meet financial goals. You might share your own budget to help your teen grasp what it costs to live, including payments for housing, insurance, transportation and utilities spending that may go largely unnoticed by youngsters. 
  1. Tracking Money – Encourage your teen to keep track of income (pay as well as money from birthday and graduation gifts, chores and other sources) as well as all spending (including for food, gas and entertainment) in a money diary, with a spreadsheet or by using a smartphone application. Review the record at the end of each month to keep the conversation going and check adherence to budget goals. 
  1. Smart Shopping – Smart spending habits should start by a youngster’s teen years. Encourage your child to learn how to use coupons and sales to cut costs, especially when back-to-school shopping and for purchases of other needed items. Once a teen starts earning money, the value of these techniques should be all the more apparent. 
  1. Cut Down Excess – Expensive coffee drinks or dairy treats can get expensive: Just $3 or $4 a day adds up to $90 or $120 a month. Breaking those habits and stashing the saved money in an interest-bearing account can pay significant dividends over the course of a year. So help your teen see how those small expenses add up over time. 
  1. Put Money Away – Cash in the wallet can be tempting to spend, but when money is stowed away in a savings account, it is out of sight, out of mind – and earning interest.

Where to save?

 Many credit unions offer programs designed to help youngsters learn to be responsible with money, such as the Matadors Community Credit Union Teen Savers accounts for 13- to 17-year-olds. Parents or guardians are joint owners and can monitor spending and savings habits through the access that provides. The accounts carry no membership or monthly fees, plus you can open the account, and start earning interest, with just $5!

With your credit union’s assistance, you can help your teen develop the increasingly complex skills needed to be financially responsible. With MCCU’s Teen Savers program, at age 16 your teen will have access to an ATM card with a $20 daily withdrawal limit; at 17, a no-fee checking account and a free debit card are added, and at 18, it converts to a free checking account. Earnings from a summer job offer a great opportunity to put to your teen on the road to financial independence.

Find out more about MCCU’s Teen Savers Accounts!

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