7 Tips for Teaching Your Teen Successful Savings Habits
As parents, one of our primary responsibilities is to teach our children essential life skills that will set them up for success. Among these skills, one of the most vital is financial literacy. Instilling effective savings habits in your teenagers will help them foster a sense of responsibility and discipline that will also spread to other areas of their lives.
Here are seven valuable tips to teach your teen successful savings habits:
- Lead by example. Children often learn best by observing the behaviors of their parents or guardians. Set a positive example by showcasing responsible financial habits yourself. When possible, talk openly about money matters, budgeting, and saving. Involve your teen in discussions about household finances, bills, and expenses, helping them understand the value of money from an early age.
- Start early. It’s never too early to introduce the concept of saving to your child. As soon as they start receiving an allowance or can earn money through odd jobs, encourage them to set aside a portion for savings. Many experts teach the 50-30-20 rule where 50% of their income goes to necessities, 30% for wants, and 20% for savings. This simple principle will help them prioritize savings while still enjoying their earnings.
- Set goals. Goal setting is an effective way to motivate your teen to save. Encourage them to define short-term and long-term goals, such as saving for a new piece of technology, trip, or even their own college education. Break down these goals into achievable milestones and help them create a budget plan that aligns with their aspirations. Regularly track their progress together, celebrating milestones achieved along the way.
- Open a bank account. Introduce your teen to the world of banking by assisting them in opening their own savings account. Help them understand the various types of accounts available and teach them how to manage their account online, make deposits, and track their savings.
- Teach budgeting. Budgeting is a fundamental skill for successful money management. Guide your teen in creating a monthly budget plan that accounts for their income, expenses, and savings goals. Encourage them to categorize their spending, prioritize essential expenses, and avoid unnecessary purchases. Tools like budgeting apps can also assist them in tracking expenses more efficiently.
- Encourage an entrepreneurial spirit. Encourage your teen to explore entrepreneurial opportunities, such as starting a small business or providing services in their community. This will not only help them earn money but also teach valuable lessons in managing finances, dealing with customers, and fostering a strong work ethic. Such experiences can significantly enhance their understanding of money and the importance of saving.
- Educate on investments. Once your teen has developed a solid foundation in savings, introduce them to the concept of investments. Teach them about the different investment options available, such as stocks, bonds, and mutual funds. Emphasize the importance of diversification and long-term planning. However, remind them to seek professional advice before making any investment decisions.
Teaching your teen successful savings habits is an investment in their future financial well-being. By following these steps and setting a strong foundation, you’ll help set them up for success.
If you are interested in opening a savings account for your teen, visit a local First International Bank & Trust branch. For your child's protection, an account cannot be opened online for minors. However, if you are ready to get started, you can open a savings account online in your name and stop by any branch to add your child to the account.
Who is FIBT?
First International Bank & Trust (FIBT) is a full-service, family-owned, independent community bank serving a wide range of communities across North Dakota, South Dakota, Minnesota, and Arizona.