Setting effective savings goals with your teenager
Tips to ensure your teenager saves and spends wisely.
Chances are, when your child reaches their teenage years they will get their first ‘real world’ job. Whether they are waiting tables, answering phones or doing the paper round, it may well be the first time they experience the reward of buying things with their own hard-earned cash.
As a parent of teenagers myself, I know that it can be difficult to guide them towards wise spending choices and achievable savings goals. Here are some of the tips I use to help my teens create a realistic savings plan, and stick to it.
Keep your teen motivated
Long-term savings goals are so rewarding when you reach them, but the process can feel challenging at times, especially when the finish line is far away. A great strategy to keep your teen motivated with their long-term savings plan is to build in some rewards along the way. For example, if they are saving $50 a week for a holiday that costs $600, tell them that when they reach a significant milestone, such as $300, they can spend the next week’s $50 on something they really want. It might push the finish line for the long-term savings goal back a bit, but they will be more likely to stay on track.
Put spending into perspective
Before your teen buys something, showing them some of the other things they could get with the same amount of money may help them to make a responsible decision. If they want to buy a $200 watch, you could equate this to 12 trips to the movies to demonstrate the scale of their purchase. Similarly, emphasise the time it would take to earn the money or save for an item. By putting a time perspective on the purchase you will help influence their spending choices in a positive way.
Map out additional costs
Sometimes, the items our teenagers want to buy are not just a one-off expense. For example, cars are something many teenagers aspire to own that have ongoing associated costs including petrol, insurance and servicing, that all need to be considered. To ensure your teenager makes the right decision, help them map out any costs they have not thought of before they sign on the dotted line, so there are no financial surprises down the track!
Perhaps the best way to help your teenager make responsible spending decisions is to encourage them to use their own money whenever possible. This will give them the confidence to manage their money, with your guidance, and develop positive financial habits.
Visit The Beanstalk for more tips for teaching your kids about money.