Whether your teen is hoping to save money for college or just wants to have some money set aside for emergencies, having savings as a teen is a great idea. But finding ways to save money as a teenager can be pretty difficult.
Although most teens don’t have a ton of regular expenses they need to worry about, they also may not have a steady income, either. That means they’ll need to come up with creative ways to set money aside.
Follow these simple tips to learn how to save money as a teenager.
Why Should a Teenager Have a Savings Account?
One of the biggest questions you may be asking when it comes to teens and saving money is “why should a teenager have a savings account?”
There are many benefits to opening a savings account for your teen!
Saving money is a great way for them to:
- Save for the future. Whether they want to help pay for college or just want to make a big purchase (like a car), having a savings account is one of the best ways for your teen to save for the future.
- Learn how to budget. In order to have enough money to put into a savings account, your teen must first learn to manage their money. A budget is the simplest way to keep track of income and spending, which means it’s a great method for teaching them how to incorporate savings into their financial plan.
- Develop good money habits. Most adults struggle with budgeting and saving, which means your teenager will be ahead of the curve if they start saving now. By helping them learn the importance of saving money while they’re a teenager, they’ll be able to take the lessons they learn into their adult life.
- Contribute to the family’s finances. Teenagers can be expensive! By giving your teen a chance to budget their money and save for a big purchase, you’re taking some of the financial stress off your plate. Giving them the tools to support themselves will not only help alleviate your financial burden, but it will also give them more independence.
How to Save Money as a Teen
Now that you know how important it is for your teen to start saving, you’re probably wondering how they can get started. Saving money as a teenager is similar to saving money as an adult.
There are a few basic steps your teen can follow to start putting money aside for their future:
Open a savings account
To ensure your teen’s savings are safe and secure, it’s a good idea to open a savings account.
If they’re under the age of 18, a parent or guardian will need to set up the account for them. Otherwise, your teen can handle opening the account on their own.
Doing some research before opening an account is a good idea. Make sure to look for a savings account with:
- No minimum balance requirement. Since your teen’s account balance will likely be low, finding a savings account without a minimum balance requirement is essential. This will help them avoid fees that will reduce the amount of money they’re saving.
- No monthly fee. It’s also a good idea to find a savings account that doesn’t require a monthly fee to use because that fee will reduce the amount of money your teen can put into their savings account each month.
- High interest rate. With a higher interest rate, your teenager can earn additional money on the money they save. Check online banks for higher interest rate options.
Get a job
Once your teen has a savings account started, they’ll need money to save! The best way to ensure they have money to put into their savings account is to get a job and start earning a steady paycheck.
There are a variety of great job opportunities for teens, if you know where to look.
Whether your teen decides to get a traditional job or start their own business, earning money by working is a great way for your teen to start saving money quickly.
Set a goal
Knowing what your teen is saving for is a great motivator to help them keep saving.
Setting a savings goal can keep your teen on track from month to month because they’ll be able to see their progress each time they add to their savings account.
Make a budget
After they start earning an income, keeping a budget will help teenagers stay on track with their savings plan.
Help your teen come up with a realistic budget based on their income and expenses. Here’s how to create a budget with your teen:
- Start by tracking how much money your teen makes each month. If their salary varies, come up with an estimate for their monthly income.
- Write down regular expenses your teen has on a monthly basis. These expenses could include things like insurance payments, gas for their car, and money they spend on entertainment activities, like hanging out with their friends.
- Add up all the expenses to see where your teen stands. If their expenses are more than their income, help them look through their spending to see where they can cut back to find money for savings. But if your teen is making more money than they spend, they can put that extra money into their savings account each month.
Cut back on expenses
When your teen starts using their budget on regular basis, they’ll be able to find areas where they can start spending less.
The more cuts they make to their spending, the more money they’ll have to save!
Find ways to make more money
If your teenager isn’t able to cut back on their spending, they could also look for ways to increase their income.
Here are a few different ways teens can earn more money to put into their savings account:
- Asking for more hours at work or asking for a raise.
- Offering to do chores around the house to earn more allowance.
- Looking for small side jobs, like painting houses or babysitting.
How to Save Money as a Teen with No Job
While finding a job is one of the best ways for your teen to start saving, sometimes working isn’t an option.
For teens who can’t get a job right now, there are still ways they can add to their savings.
These savings ideas are perfect for a teen with no job.
- Save gift money. Teens often receive cash gifts for birthdays and holidays. Instead of spending that money, they could put it in their savings account for the future.
- Put aside allowance. Does your teen earn an allowance at home? Helping them save some of the money they earn each week is a great way to teach them the importance of saving.
- Sell stuff. Your teen likely has a ton of valuable stuff lying around their room that they don’t want or use anymore. If they want to start saving money but don’t have a job, encourage them to clean out their room and sell the things they no longer want. They can host a garage sale one weekend or list the items online to earn some extra money to put toward their savings.
- Do odd jobs. Even if your teen doesn’t have the time to take on a part-time job, doing odd jobs during their free time could be an option. Offering to do small tasks around the house for friends and family is a quick and easy way to earn some extra money without taking on the responsibility of a job.
Whether they have a job or not, this is how to save money as a teenager.
Following these steps will set your teen up with a solid financial plan and help them develop good money-saving habits that will serve them well into their adult years.