According to our Youth Economy Report, kids and teens who are encouraged to save are far more likely to continue saving as adults. Our data shows that British children saved over £12.7 million in 2020, which equates to 12% of their total income.
From your teen's point of view, there are also plenty of reasons to save. Whether they are looking to save up for their first car, a trip away with friends, or a new pair of trainers, getting started is the most crucial step.
Here's how you can help teens save money:
- Open a Junior ISA
- Separate spending and savings money
- Keep track of purchases
- Think twice before buying
- Start budgeting
- Do chores to earn pocket money
- Getting a summer or part time job
- Use student ID
- Get a GoHenry prepaid debit card
Open a Junior ISA
Parents or guardians with parental responsibility can open a junior ISA and manage the account. Your teens can take control of the account when you are 16 but can’t withdraw the money until they turn 18, so this is a great way to teach them about long-term saving, ISAs, investing and finances.
Separate spending and savings money
There is a fine art to saving. Firstly, it's a lot harder to save when you don't have a goal in mind. To make saving easier for teens, help them create a specific and measurable goal that allows them to separate their spending money from the money they want to save.
Once they have this, it can help to use a savings calculator. This will help your teen determine how long it'll take to save for a specific goal. For example, perhaps they want to save £150 by the end of summer; this means they need to save £18.75 a week.
From their pocket money and other income, they can now work out how much they can spend each week and how much they have to add to their savings pot to reach their goal.
Keep track of purchases
One of the best ways to save money is to keep track of your teen’s spending or ideally get them to do this via the GoHenry App. This way they can see if they are overspending or have excess cash that could easily go into savings. Helping them to see that tracking spending not only helps them to spend and save more wisely but also helps maintain control of finances, is something that will be the cornerstone of their lifelong financial habits.
Think twice before buying
Being conscious of how much is spent means helping your teen to think twice before buying. Conversations around needs versus wants, and foregoing impulse buys is a start. Remind your teen to start by budgeting (see below) to give themselves a weekly spend. At the same time they should think about why they spend. Is it peer pressure? Is it boredom? Are they spending because they are subscribed to too many stores and services which send a constant stream of marketing emails and discounts? If so, unsubscribe!
Start budgeting
There are two ways your teen can save money. One is by earning more (see below), and the other is by spending less thanks to careful budgeting. Budgeting means:
- Not spending without thinking
- Keeping track of their purchases and ATM withdrawals
- Thinking twice before buying items
- Looking at where they waste money daily
- Watching how much they spend online
- Making sure they get the lowest price with discounts and vouchers when they do spend money
Encourage them to understand that just a simple thing like buying one small bottle of cola five times a week quickly adds up:
£1.60 x 5 = 8 a week (£32 a month)
Or one latte:
£3.25 x 5 = £16.26 (£65 a month)
Do chores to earn pocket money
If, after pocket money and budgeting, your teen needs to top up their savings, the next element is to encourage your teen to earn more. According to our Youth Economy report, more than seven out of ten kids (71%) now say that it's essential to make their own money – and even children who are too young to get a job are giving their pocket money a boost by helping out around the house. In 2021, GoHenry kids earned £2.9million from completing tasks set in their GoHenry app.
Getting a summer or part time job
Nothing will improve their income faster than getting a summer or part time job. The findings from our latest Youth Economy report indicate that teens are already taking an entrepreneurial approach to earning. Aside from classic teenage jobs, suggest your teen think outside the box for ideas on how to earn money this summer. They could try dog walking or even putting the clothes they don't wear anymore up for sale. A quarter of kids and teens (25%) are now earning from selling things on online marketplaces such as Etsy, eBay, Depop and Vinted, with an average monthly 'wage' of £7.34.
Use student ID
If your teen is over the age of 16 and is a full-time student in further education, they are entitled to student discount or student travel cards such as the ISIC and Totum. This includes Sixth Forms and Colleges. The sign-up process is very easy and if they qualify they’ll get an amazing array of discounts from 15 to 25% across a range of shops and restaurants and services.
Get a GoHenry prepaid debit card
A GoHenry card gives your teen access to a broad range of financial education tools with the in-app Money Missions. Here teens can watch videos and take quizzes to learn about investing, saving, compound interest, spending, and more. This means when the time comes for teens to go off to university and get access to their Junior ISA funds, they will already have the money skills they need to manage their savings wisely.
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