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Teach Your Teen To Have A Savings Habit

Let’s face it: Spending money is way more fun than saving it. This is especially true for young people, who often can’t wait to spend money as soon as they receive it. Resisting the urge for immediate gratification is a discipline that must be taught as children grow up. Granted, some kids learn this skill better than others, but the data is clear: Young people who learn to delay gratification become more successful adults.

The habit of saving money is a form of delayed gratification. It requires a conscious choice to do without something you want now, setting aside that money for a future purpose instead. If a person is not used to doing this, it can be difficult - the money “burns a hole in your pocket.” But with frequent practice, it becomes less difficult with repetition.

That’s why we teach teens to make saving a habit every single time they receive money. At their age, the goal is simply to establish the habit. Once they develop the habit of saving a little every time, it becomes easier and less “forced” to do.

The Benefit Of Early Habits

Another fact of human nature is that habits are hard to break, and bad habits are especially hard to break! The old saying “you can’t teach an old dog new tricks” rings true. So when we allow ourselves to develop unhealthy financial habits, it’s going to be much harder to break those habits and re-learn positive money habits later.

Parents can do their kids a huge favor by helping them establish positive money habits early in life. When a teen learns to save money from every allowance, side job, and birthday gift, the power of habitual behavior ensures that they will most likely do the same when they start earning a paycheck. The habit of saving, established early in life, will set them up for financial success in adulthood.

What To Do

Every savings plan should include three categories, even for teens:

  • Emergencies - Always have a “cushion” for when the unexpected happens.

  • Retirement - Start as early as possible and unleash the power of compound interest!

  • Financial goals - Any future purchase you will want to make (prom, car, home, vacations, etc.)

With some intentional actions, parents can help their teens establish a savings habit.

  1. Make sure your teen has their own savings account. SCE Credit Union has free youth savings accounts that can be set up in your teen’s name, with you, the parent as joint account holder. Receiving money transfers from mom and dad is easy, and with online banking and the mobile app your teen can view their account activity. Check out SCE FCU’s Teen Scene!

  2. Give your teen frequent opportunities to save. Teens can't save money if they don't receive any. Setting a weekly allowance, or paying your teen for regular chores like babysitting or lawn mowing are great ways to do this.

  3. Help them set savings goals. Challenge your teen to decide what they are saving for, and how much. For instance, “I want to set aside $200 for emergencies by October 1,” or “I want to save $500 to spend on senior year activities by the end of summer break.”

  4. Use visuals to track savings. Believe it or not, having a visual reminder of savings progress helps to maintain your teen’s habit-building motivation. We recommend going old-school: Print out a savings “thermometer” graphic that your teen can tape to the wall and color in with a marker every time progress is made.

  5. Add some extra incentives. Reward your teen’s positive savings habits by offering to match their savings or give bonuses. For instance, “If you save $250 for this goal, I’ll match it with $250.” Or for a larger goal, “When you reach 50% of the goal, I’ll put in a bonus deposit of $100.”

  6. Cheer them on. Praise for positive behavior goes a long way!

Help us empower the next generation for financial success!

The Center for Financial Empowerment is a 501c3 nonprofit organization whose mission is to empower disadvantaged youth through financial literacy education. Find out more about our work.


Choose To Save, Take Charge Today, August 2013


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