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Entering the workforce as a teenager is often an exciting and liberating experience. With this eagerness, though, also comes a lack of smarts in regards to how important it is to save and to have long-term goals. In order to really give your teenager the lowdown on how to be a smart saver as they start their career, consider the following tips.
Talk to a Professional
To give your teenager the lowdown on smarter saving, try talking to a professional at a financial institution such as Heritage Bank. This will allow them to grasp the seriousness of saving rather than just seeing it as another lecture from their parents. Banks will provide working newcomers with some great advice on budgeting, saving tips and tax requirements. And they will be able to explain in detail exactly what having an income now means.
Independence vs. Responsibility
The downside to your teenagers earning an income is that they may take advantage of this new-found freedom. The excitement of having regular sums of money coming into their bank accounts may not be looked at in regards to long-term financial stability, but rather what they can do with this extra cash now.
To demonstrate how this independence also means increased responsibility, have them pay their own way on items you would usually pay for, such as lunch, movie tickets, and gas. They will quickly learn that without smart saving, they can’t afford any of these.
Make It Simple
An easy way to give your teenagers some insight into smarter saving is to show them how simple saving can be. The best way to do this is to help them set up a savings account that will direct debit money from their pay every week, biweekly, or monthly.
By demonstrating how easy it is to put aside small, regular contributions, your teenager can maintain this approach to saving throughout life. It will also show how easy it is to develop an emergency fund if unexpected expenses occur.
Net vs. Gross
A big potential stumbling block for teenagers entering the workforce is trying to understand the difference between what they earn and what they’ll actually be taking home. The difference between net and gross income is important to know, as it will help in teaching your teenagers about how to start a budget. And budgets are the key requirement to smart saving.
As a parent, you only ever want the best for your children, but as they begin to walk that line between adolescence and adulthood, you feel less and less in control of their choices. Understanding the importance of financial security is one such concern and is often a difficult one to get across to a teenager. So to make sure you can best inform your child of the benefits of smarter saving, be honest, seek help where it’s needed, and discuss rather than lecture.
What are some smarter saving tips you think are important for a teenager to know as they enter the workforce? How have you communicated this with your children? Discuss you answers below.