Teaching Teens to Save Money
Teaching teens to save money seems difficult, but is it really? What I’m going to talk about is from my own experience about 10 years ago as an actual teenager, and how I was taught to save money.
When I was a teenager, I was apathetic, bored and jaded, probably just like your teenager. But I was great at saving money. The reason was that I rarely got things I wanted unless it was a holiday or my birthday. Now, I have very kind, generous parents, but they were smart. They simply didn’t just give me anything besides clothes, and if I wanted clothes, I couldn’t go for the expensive designer kind or they would balk at that as well.
Even when I was much younger, I got a few surprises, but for the most part, the holiday/birthday rule was in effect. It was in this way that I learned to appreciate what I had, and that if I wanted something I had to either save my allowance (which peaked at $20 a week when I was 13 but averaged from $5-10) or find another way to make money. If I wanted something and I told my parents about it, they would say “save your money”. From that second on, I was on my own to get whatever item I wanted.
When I wanted a TV in my room, I had to save up to buy it myself. I remember at the time I was getting $5 a week in allowance, and it took me quite a while, probably six months to get enough money together. I was so proud when I finally announced to my Dad that I was ready to go buy my $161 13″ tv. I still have that TV, its in my living room right now. It was the first “large” item that I ever bought.
Sometimes my parents offered me a small hourly rate to do chores outside of my normal ones, things like hauling wheelbarrows of mulch all over the yard or spending a whole day picking weeds. These were free choice, and that was something that stuck with me. I could choose whether I wanted to make money or not. But when I was making those choices I was also saying that I wanted to work hard for the money I made.
If I wanted more than the money I already had, I had to get it as allowance, earn it or borrow it from them, they didn’t just give it to me. On the rare occasion where they just gave me money, it was totally random and never when I actually thought I needed it. I was always surprised in these cases, and it was clear that I shouldn’t expect it, but it was given in a spirit of generosity.
When I was about 15, my Dad started taking me to stock seminars. I had always liked the idea of making my money grow, and had saved about $1000 by that point. $1000 was a lot because I didn’t have a job yet, and I could have spent the money on anything I wanted. Mostly, I didn’t have any idea what I wanted to spend it on because I had developed a mindset that was conducive to amassing large quantities of cash, mainly that I liked the process of accumulating the money more than I liked spending it.
I loved going to those seminars with him, even though I never really told him that. I liked sitting in a room with a notepad, usually being the only woman learning about fundamental and technical analysis from a securities broker. It made me feel good and grown up and like he had no doubt that I’d be able to keep up or know what the people were talking about. If I had questions, he answered them, and we usually spent the whole rest of the night talking about money.
This made a big impression and made me want to learn, practice investing and save even more. He took me to Charles Schwab to open my first custodial brokerage account. We sat down with a consultant and the consultant showed me that if I invested $100 once a month starting that moment, it would grow into 1.2 million after a certain period of time. I was hooked.
I also didn’t want to disappoint him, so I made it a point to tell him if I did a good job at an investment, or saved a lot. He never made me feel bad or ashamed if I had a question, and was always available to explain anything I wanted to know. No matter what I wanted to buy or do with my money, he never judged, but if I saved, he was extremely proud. If he had been judgmental when I spent money, I would have spent to rebel (yeah, I was that difficult).
My relationships with my parents were shaky at the time. This caused a lot of emotional resentment. Although, when it came to investing and money, we always dropped that and talked plainly. In hindsight, the ambiance of safety and lack of judgment around those financial conversations smoothed things over a great deal. In the long run, the conversations made it much easier for me to develop an attitude of abundance.
Accumulating money had been made into a game that I only won if I found new ways to create it myself. Games are irresistible to kids. If you make the game real by making them think for themselves, they win in more ways than one. Teaching teens to save money doesn’t have to be such a struggle if you let the kids think for themselves and decide what they actually want to make their saving goal.
What I Learned
* If you want something big or different, you have to save for it.
* If you want more money, you have to find a way to go out and get it yourself, but how you do this is all up to you.
* Money is fun to save on its own without something to spend it on.
* Investing is fun, and to learn it well is a point of pride.
* No matter what you do with your money, that is ok, but things like making money grow are what you should be most interested in.
* No one will just give you money, and if you borrow it, you have to pay it back.
* Money should be a safe, non-emotional topic to talk about. If you have questions, there is no reason to be afraid to find answers.
By taking the emotion out of teaching their teen to save money, and being generous with their time and attention rather than their pocketbook, this was how my parents taught me to save money.
Teaching teens to save money is not as hard as it seems.
Do’s and Don’ts- Teaching Teens to Save Money
1. Learn about money yourself and have non-judgmental, positive conversations from the time that they are young.
2. Celebrate when they save but avoid negative comments when they spend. You will never teach a teen to save money by nagging them about the things they enjoy. Keep your mouth shut when they buy something they enjoy. Your opportunity to teach and praise is when they have little questions about investing, checking, money management and what to do with their personal finances.
3. Set a good example when you talk about your own cash flow. Do not show anxiety about your finances in front of your kids.
4. If things aren’t going well financially, instead of allowing an attitude of negativity to invade the house, involve them in frugal decision making.
5. Avoid negative financial comments about other people. If someone wins a million dollars on TV, say positive things.
6. Don’t make money a source of shame.
7. Make it clear that they are totally on their own if they want to purchase something big. Tell them “save your money” and say nothing else when they say they want that big thing.
8. Do not break down and buy something for them after you told them to “save their money”. This item is now off limits for you. You can’t buy it for Christmas, their Birthday, or Columbus day. They must find a way to buy it themselves. Once they do, make it clear how proud you are that they did it all by themselves. Take them to the store and share in their excitement. This is not to teach them consumerism, you are celebrating the fact that they saved the money. If they never get the money together, just drop it.
9. Encourage them to learn about money. Be available when they want to talk about it.
10. Ask their opinion on business or investing ideas (within reason). Discuss whatever they suggest openly. If they are wrong about anything in their analysis, be very gentle.
11. Encourage entrepreneurship. If they want to start their own business of any kind, be their biggest cheerleader.
12. Explain credit cards thoroughly, way before they are old enough to qualify. Emphasize pitfalls and dangers. Explain the concept of paying interest and how much it actually costs in real dollar terms.
13. Show them financial calculators on the internet. Point out how much their money will grow over time with compound interest. The idea of making money while they sleep is very compelling. Compare this to how hard it is to make money hauling wheelbarrows of mulch throughout the yard.
14. On a gift giving occasion, give your teen some shares of stock or books about money. Be ready to follow the stock and talk about the books, but only when they want to talk about it. If you drag them or push too hard, they’ll rebel and go the opposite way, just to irritate you. Teaching teens to save money is less of a one time act than a constant guiding process where you lead by example.
15. Do not treat money like it is boring or act like they would be bored by you talking about it. When they are adults, they will spend a great deal of time dealing with their own money. If you make it fun for them when they are teens, they are so much more likely to do well and be independent when they are grown-ups. Unless you want them living with you until they are 40, this is a great thing.
I hope you enjoyed my article about teaching teens to save money. Comment, gripe or leave your own ideas about teaching teens to save money below.
