How to motivate teenagers to save
Motivating teenagers to do something—anything—isn’t always easy. But when it comes to saving money, it can be well worth the effort. Not only can you help them put funds aside for that proverbial rainy day, but you can help them build sound financial habits that can last a lifetime.
The key to motivating teenagers to save money is to help them see what’s in it for them. “Help them set a savings goal and prompt them to stay focused,” says Jim Heitman, owner of Compass Financial Planning. “The goal can be most anything you approve of—from a new skateboard to a senior trip to Paris. Just lay out and enforce the clear consequences for success and failure.” You also can offer encouragement along the way. Robert Schmansky, founder of Clear Financial Advisers in West Bloomfield, Michigan encourages parents to provide incentives. “Just as the government and employers incentivize people to contribute to their retirement accounts with tax breaks and matching contributions, parents can provide incentives for their children to save. It can be as simple as matching their contributions with some of your own,” Schmansky says, “or rewarding them when they reach a savings goal.” You might deposit $100 or offer a day trip to an amusement park when your teen has reached a predetermined benchmark, whatever you find effective for motivating the teenagers in your house.
Finally, you can encourage your teen to take a long-term view by calculating how even small, regular contributions and interest can add up over time. Not all teenagers will respond to this long view, but some will. To help, you can also have your teen try the “Reality Check” online tool. Offered by the Jump$tart Coalition for Personal Financial Literacy, this tool helps teens understand the cost of living on their own, which can be helpful in motivating teenagers to save.
And because even the savviest of teens may not have large sums to deposit, parents also should work with them to find the right savings account. First of all, it’s important that the account have easy, simple terms. Some banks charge fees and have high minimum balance requirements. Consider the Ally Bank Online Savings Account. It has no monthly maintenance fees, and you can open and fund an account with any amount. Learn more at Ally.com or call live, 24/7 customer support at 877-247-ALLY (2559) today.