The Future? No Worries! Teens and Saving
By Mary Snyder
Who needs to save money in today's society? You can always buy on credit. Right? Yes, you can buy anything from appliances to cars on credit and getting a credit card is often easier than setting up your first checking account. Buy now, pay later has become the motto of our country, and many young adults find themselves saddled with thousands of dollars of debt before the age of twenty-five. Teaching your teen the value of saving can help him to understand the benefits and drawbacks to buying on credit.
Getting your teen to save money can be a futile effort if you leave it all in his hands. You can laud the benefits of saving from the rooftops and he won't hear you or, for that matter, he won't care. Teens live for today. As a parent, you must mandate savings once your teen begins to work. It's your job to see that your teen learns to save for the future.
Savings 101
Make it simple for your teen to save money. Once your teenager starts his first job require that a percentage be set aside for savings. Certainly, your teenager will balk and whine, but overlook the noise and demand your rules be followed. This isn't an easy task and it will require that you explain the benefits of long-term and short-term savings. Sit down with your teenager and discuss his goals. Is college in the future? What are you willing to pay for? Will you require that he spend his own money if he wants to live on campus? Does he want to buy a car? A new stereo? Is he hoping to visit Europe after graduation?
Help your teen determine his long-term and short-term goals. Once he's determined this, help him to establish a dollar amount for each goal and set up a savings plan that will make it possible to make these purchases. Of course, if he's hoping to save enough money to purchase a new Porsche you might want to explain that at his current rate of savings it will take him more than ten years. Talk him in to something within his range-possibly a used Ford Escort.
The Savings Plan
Once you have a good idea of the dollar amount needed, you can set up a savings plan. The plan you create together can be a simple dollar amount per week that he needs to put back or you may decide that he will save 50% of his income until time for college. Expect to be met with sighs and moans as you go over this plan, but share the benefits. It may only take six months to have enough money to buy that new stereo.
The College Savings Plan
Are you planning to send your teen to college? And foot the bill? Why not have your teenager contribute to his education. Create a separate savings plan for college. You can offer to match his deposits and this money goes only to his education. A good idea is to have a portion of his savings go into the college plan and the remainder into a personal savings plan.
Having a college savings plan enforces the idea that college is something you must work for and not just an extension of a high school education. Making your teen save and spend his own hard earned dollar to pay for college will help him realize that higher education is expensive and therefore must be taken seriously. It can also reduce the risk of your teen spending two years taking basket-weaving courses because he knows he can get an A and therefore increase his grade point average.
Enforcing the Plan
Teens live in a constant state of change. The time will come when your teen needs to put his hands on his savings money. A week before the Prom he decides he'll ask the girl of his dreams and she says yes. Suddenly he needs $100 from his savings account. Allow him to withdraw the money on one condition. He must pay back his savings account within a certain amount of time.
Your goal is to teach your child the benefit of saving for his needs as opposed to buying on time or plastic. The last thing you want is to find your child in bankruptcy court before he graduates from college. Just think of all those loans he'll need you to co-sign. Prepare now.
|
