It’s finally spring – the time when a young man’s or woman’s fancy turns to thoughts of…summer jobs! With dreams of healthy paychecks fueling summer fun or special purchases, it is easy for teens to spend their money, even before they start working. So now is the perfect time to sit down with your child and help them make smart financial choices.
And according to Alecia Blair, director of Military Saves, part of the non-profit America Saves initiative of the Consumer Federation of America, it is never too early or too late to have conversations with children about the importance of saving money. A military spouse and mother herself, Blair noted there are many age appropriate ways to make your children savers, not spenders, something she is doing in her own home.
“My son is 8 and last year we set up a joint savings account for him for a vacation we were planning,” explained Blair, “so that he would have some of his own spending money during that vacation.” She said the object was to help him understand that money comes from somewhere and build an appreciation for that. “It might be a good idea to set up a joint savings account even at a younger age so they can see the safety of those types of accounts and understand the concept of interest as they see their savings grow,” Blair added.
Even younger children can learn the value of saving money with the help of the old, reliable piggy bank. “I recently had a conversation with my 5-year-old daughter about saving money in her piggy bank when she gets birthday money or special gifts. It may not seem that you are having a real conversation about personal financial management but those seeds stick with our children,” said Blair. Youngsters can easily grasp the concept of saving money in a piggy bank now for a later reward. She said you can talk to your child about goals for the money — a new toy, or trip to a candy store — to help them learn there is a benefit to waiting, that they don’t need to spend it right away.
Getting teens involved in the family budgeting process is a great way to model healthy personal financial management recommended Blair. “When your child starts their first job or even earlier, include them in the process of discussing some basic household financial management and get them to look at the cost of things like groceries, clothes, entertainment,” she said. “You’re teaching them that things just don’t show up, there are costs associated with that.”
For that first time worker, Blair noted parents have an opportunity to talk with their child about what they are going to do with their earnings. “Help them think about putting a portion of each paycheck into savings; write out a budget with them — maybe some of the money can go towards things they want to purchase such as clothing or entertainment, but help them look at long term goals such as college savings,” she said.
Helping your teen set financial goals and create a budget will also help them learn impulse control, especially in this era of instant pay with cell phones or debit cards, Blair added. Military Saves and the Military Youth Saves program offers a savings pledge for teens and a simple savings plan on the militarysaves.org site to assist in the process. “Our research has shown that those who have a plan are twice as likely to achieve their savings goals and students who have even a small amount of college savings are more likely to attend and complete college then those who do not,” she stressed.
Teen workers can also turn to American Saves and the America Saves for Young Workers program for more financial tools. The Young Workers resources help teens think about what they’d like to do with their money and develop a budget that includes the fun stuff, along with long-term saving goals. According to Amelia O’Rourke-Owens, America Saves for Young Workers Program Manager, the organization wants to reach young people at the time they’re earning their first paycheck to create a connection between earning and automatically saving.
“At America Saves for Young Workers (americasaves.org/organizations/current-initiatives/first-time-workers) young people choose a savings goal for themselves that motivates them towards the savings behavior,” explained O’Rouke-Owens. The program helps teens avoid impulse purchases by building an alternate behavior — a behavior of plan-for-what-you-want-and-save-to-get-it she noted. To help teens stay focused on their savings goals, they can sign up to receive automated messages of good savings tips and motivating reminders for the individual’s goal on their phones or other electronic devices.
Blair called financial training an on-going process for families. “There are a lot of external influences in our society that teach children the opposite of saving — for parents we have to keep instilling the idea of saving,” she shared. Building strong savings habits is especially important for all service families due to the unique stresses of military life. “Having lived this life for 15 years I understand that having an emergency fund has been extremely helpful to deal with the nuances of military life,” noted Blair. “And if you model good financial behavior in the home it may not feel like your children are getting it, but if you model it enough those seeds will be planted and they are going to learn good habits.”
To get your whole family on the path to financial wellness, visit militarysaves.org to find a wealth of helpful resources. To learn more about the Military Youth Saves program, click on the link under the ‘For Savers’ tab at the top of the site’s home page. You’ll find a link for your teen to take the Military Savings Pledge. There is also a direct link to the America Saves for Young Workers website, with more tools and tips for managing money. The whole family can benefit from the programs’ efforts to encourage and support you as you build more savings, reduce debt and increase wealth for the future.
