How to Set Effective Savings Goals with Your Teenager
29 Jun 2015
Posted in: Getting Married
In this blog we’re bringing you a few tips to help you make sure your teenager both saves and spends wisely.
Most likely, when your children become teenagers they will get their very first part-time job. Whether this is babysitting, working behind a till in retail, waitressing or answering phones in a customer care centre, it could very well be their first experience of using their hard-earned cash to buy things they want.
We all know it can be difficult to guide teens towards spending wisely and meeting their savings goals. To both you and your teenager, here are some guidelines to help them make and stick to a savings strategy that’s realistic.
It’s so rewarding when you reach long-term savings goals, but we all know that the savings process itself can be tough at times, particularly when the end goal is so far off. An ideal way to keep your teens motivated is to build in smaller prizes along the way. For example, if your teen is saving for a holiday that costs €400, let them know that when they reach the halfway mark they can buy something they really want for that holiday. Set an appropriate spending limit for this, such as €40, and while it may push back the date they reach their overall savings goal by, they will be more likely to keep on track.
Before your teenager chooses to buy something, you can assist them in making a more responsible decision by showing them the other options available to them for the same cost. For example, if they buying clothes valued at €100 could equate to ten trips to the cinema with their friends. Show them the opportunity cost of their decisions i.e. what they will have to do without by purchasing one item over another, and you will positively influence their purchase decisions.
Often, some aspirational items for teenagers to own, like cars, are not just an expense that’s one-off. There may be high costs associated with these on an ongoing basis, including petrol, servicing and insurance in the case of cars. Avoid nasty financial surprises for your teenager and help them map out any cost which they may not have considered before they make a major purchase.
By encouraging your teen to use their own money wherever possible, you can help them develop a habit of making responsible decisions when it comes to their finances. This will increase their confidence to spend their money wisely and give you the peace of mind to know they can look after themselves when it comes saving and spending.
Allied Irish Banks, p.l.c. is regulated by the Central Bank of Ireland.