A budgeting and saving guide for parents of teens
Help your teen start their future on the right footing by teaching them the importance of saving for a rainy day.
As parents of teens, we play a critical role in teaching young adults the art of saving and the importance of putting away some money for a rainy day. When parents do not teach teens to save, they inadvertently do not foster the right savings habits.
We chat with financial guru Eunice Sibiya on her tips on how to encourage your teen to be financial savvy.
Keep communication open
The first step in being financially educated is understanding the pillars of finance. Keep communication with your teen open and be there to answer any questions they might have around finance. By doing this you’ll help your teen begin to understand money and how it works, which will help to financially empower them and it will make them less vulnerable to over indebtedness as they grow older.
Teach healthy money habits at a young age
Not saving puts your teen at great risk should anything unexpected happen, such as unexpected costs for education, and it also means that there is nothing put away for that rainy day. As parents, we can’t look after our children’s piggy bank forever, and the sooner your teen becomes financially empowered, the better.
The key to saving is having financial plans and goals, even when you’re a teen. It’s never too early or too late to start teaching your child about money and how to be more mindful of spending.
Long and short-term goals
Your teen needs to know what their short, medium and long term financial goals are. You can help them work these out by assisting them with drawing up a budget.
A short-term goal is one that comes up in the next couple of months up to two years, such as buying a pair of shoes, a TV or planning a December holiday with friends. A medium term goal is one which needs more consideration and a longer period to save, such as deposit for a car or saving towards your tertiary education. A long term goal is the most important, such as saving for a place of their own.
All about budgeting
Budgeting is essential for day-to-day living, but also important for saving. Sibiya says that teens should budget to save, in other words, include a portion of their income (whether it be from an allowance or job) every month as an item on their budget to put away, rather than waiting until the end of the month to see what is left over.
Help them open a savings account
A key way of helping your teen save is to open a savings for them, with no monthly account fees, where their money is safe and earns interest. The type of product you choose depends on your teen’s specific goal and how long your teen wants to save, so it is important to visit your bank or registered financial advisor to get advice on which savings product is best for your child.
If your child doesn’t get pocket money
Not earning an allowance doesn’t stop your teen from having a financially secure future. Not everyone can afford to give their children an allowance or pocket money, so why not encourage your teen to do some jobs around the neighbourhood that could create an income?
Your teen could babysit, walk dogs, or do some gardening work – like mowing lawns for your neighbours.
If you can, let them do some more jobs around your own home and negotiate fees with your teen. These could include daily chores like sweeping or cleaning the house, or special jobs like spring cleaning an entire room in the house.
