For many parents, talking about money with their teenagers begins and ends with "How much do you need?" Kids want to learn, and they would like to learn from their parents and have them as role models. We realize that oftentimes parents are at a loss knowing what to teach their kids or how to go about it, so we've developed some helpful tips that will assist you along the way:
1. Communicate with your teen your values concerning money – how and why you save, choices you've made to make your money grow, and how you spend it wisely. A good example of this is when you’re in the grocery store and you choose items on sale versus regular priced items. Or choosing generic brands instead of the more expensive brands.
2. Help them learn the difference between wants and needs – this is really key for teaching teens good decision making. Needs are the practical things that will help your teen in school and social activities like a good backpack, or school supplies or athletic shoes for sports. Wants are things that they desire, but can get by without until they can afford them, like the latest iPhone or whatever the newest fad is.
3. Set Goals with Your Teen– Help your teen set goals for things they want or might need, like a car or computer. Instill the idea that they always want to leave money in their savings account for other things that come up that they haven't thought of. When your teen asks you to buy something for them, use it as an opportunity to teach them how they can buy it by setting a goal and saving their money.
Consider encouraging your teen to save by matching the amount they save, or telling them if they save for the whole amount, you will pay for half so the other half can stay in their savings account. This helps them stay on track and also creates excitement.
4. Teach Your Teen to Save, Share and Spend – One of the joys of money is that you can share it by donating to charity or causes. By teaching your teen to share they will have a balanced view of money and its ability to help others, plus they’ll feel good about themselves.
5. Paychecks, Allowance and Decision Making – If your teen has a job or receives an allowance, make sure they set aside some for savings and some to share and spend. A good rule of thumb for adults is to save at least 10%. Teens should save more since they typically don't have bills like adults to.
6. Spending Decisions – Let your teen learn from their spending choices, good or poor. Before spending takes place you can initiate an open discussion of spending pros and cons. One way to do this is to provide your teen with alternative choices when they want to buy something. For example, if your teen wants to buy designer jeans for $150, you could also point out to them that the same $150 could buy 10 movie tickets or a heck of a lot of music downloads. This teaches your child to think about choices and how to make decisions.
7. Keep Good Money Records – Another important skill for teens to learn is to keep track of their money! Teach your teen to keep receipts so they can see what they have been able to purchase with their money. Review their savings account statements with them, show them how they are earning interest. Once they understand the basics, your teen can sign up for Online Banking and review their account on their own.
BECU is committed to helping kids develop healthy savings habits too. Our Early Saver Savings Account makes it easy and rewarding for young people under age 18 to save:
• earns 6.17% APY on the first $500 in the account
• no fees to maintain account
We hope these tips are helpful to you. Look for future tips on how to teach your teen to manage a checking account and debit card.
Teaching your teens to be good savers is a gift that lasts a lifetime. Don't be afraid to start the conversation.
Rates stated as Annual Percentage Yield (APY) on the first $500, effective 7/1/13 and subject to change.