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 US children saved over $2.8 billion in 2020, which equates to 10% of their total income.
From your teen's point of view, there are 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 sneakers, getting started is the most important step. The good news is you can help them with financial education and information on how to save.
Related: Teaching teens about money management
How to save money as a teenager:
- Open a savings account
- Separate spending and savings money
- Keep track of purchases
- Think twice before buying
- Start budgeting
- Do chores to earn more allowance money
- Getting a summer or part-time job
- Set a savings goal
- Cut back on unnecessary expenses
- Try cash stuffing
- Unsubscribe from alerts and offers
- Use a round-up app
- Use student ID
- Show teens the benefits of saving money
- Set a good example
- Get a GoHenry prepaid debit card
Open a savings account
As a parent or guardian, you can open a savings account and manage the account on your kid's behalf. Your teens can take control of the account when they are 18, at which point they can also withdraw the money, so this is a great way to teach them about long-term saving, different types of savings accounts 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, they might want to save $150 by the end of summer. If there are 8 weeks of summer vacation, they could save $18.75 per week to reach their goal.
From their allowance 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. This way, they can see if they are overspending or have extra cash that could go into savings. Helping your kids see that tracking their spending not only helps them to spend and save more wisely but also helps them maintain control of their finances. This 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 are important. With a bit of thought, your teen might realize that missing out on impulse buys is a smart decision in the long run.
Remind your teen to start by budgeting by giving themselves a weekly spending limit. At the same time, they should think about why they spend money impulsively. Is it peer pressure? Is it boredom? Are they spending because they are subscribed to too many stores and services, and these stores 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, and the other is by spending less, thanks to careful budgeting. This means:
-
Not spending without thinking
-
Keeping track of their purchases and ATM withdrawals
-
Thinking twice before buying items
-
Figuring out where they waste money daily, weekly or monthly
-
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 small purchases can really add up. For example, if they buy one small bottle of cola five times a week.
One bottle of cola costs an average of $1.60.
$1.60 x 5 = $8 a week
$8 x 4 = $32 a month
Related: Budgeting for teens
Do chores to earn more allowance money
If your teen needs to top up their savings, they will want to earn more money in general. According to our Youth Economy report, more than seven out of ten kids (71%) say that it's important to them that they make their own money. Even children too young to get a job legally earn an allowance by helping out around the house. In 2021, GoHenry kids earned $3.1 billion from completing paid tasks set in their GoHenry app.
Related: Should I give my kids an allowance for doing chores?
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, your teen could try dog walking or even putting the clothes they don't wear anymore up for sale. A quarter of kids and teens are now earning money by selling things on online marketplaces such as Etsy, eBay, Depop, and Vinted, with an average monthly 'wage' of $14.67. These platforms are 18 plus so will need parental permission apart from Depop which is 13+ but your teen will need to use a parents PayPal account.
Related: Ways to make money in the summer as a teen
Set a savings goal
Setting savings goals helps teens to save money because they provide a clear target and motivation to save. When teens have a specific goal, they are more likely to stick to their savings plan and feel motivated to save. For example, if they are saving up for a car, they will be more likely to resist the temptation to spend their money on other things.
Cut back on unnecessary expenses
We all waste money every day on small things that can add up, like impulse buys we don’t want and daily takeaway coffees. Teens are notorious for spending more like this because they don’t plan ahead. To help them save money, talk about the unnecessary expenses, such as paying more for snacks you buy at the gas station than you will if you just bring food from home. Or not keeping track of the subscriptions on their phone for apps and games. It may seem like small money, but it all adds up.
Try cash stuffing
Cash stuffing is another budgeting method where you withdraw cash from your bank account at the beginning of each month and then put it into envelopes labeled with different categories, such as savings, going out and toiletries. When you need to make a purchase, you take the cash out of the appropriate envelope. This method can help your teen stay on track with a budget and avoid overspending, BUT only if they won't be tempted by all the cash they have lying around. If they are, then you are better off separating the cash using an online method like an app.
Unsubscribe from alerts and offers
Simple things like suggesting your teen not save card details onto the browser so they have to enter their card manually each time, unsubscribing from favorite shops, and email alerts can stop your teen spending and help them find more money to save.
Use a round-up app
Round-up apps are worth using as they work by rounding up anything you spend to the nearest pound and then saving the difference. For example, if you pay $2.60, these apps will charge your account $3 and put that 40 cent difference into another account or a separate savings pot.
Use student cards for savings and discounts
International Student Identity Card (ISIC): The ISIC card is an internationally accepted student discount card that offers travel, accommodation, and activities discounts. The card costs $22 per year but can save you money on your next trip abroad.
National Association of College Stores (NACS) Student ID: The NACS Student ID is a student discount card that offers discounts on books, supplies, and other items at participating college bookstores. The card is free to obtain and can save you money on your next textbook purchase.
Student Advantage: Student Advantage is a discount program that offers discounts on travel, entertainment, and other products. You need to be a full-time student to qualify for Student Advantage, and the card costs $30 per year. Finally, Amazon Prime Student: is a program that offers free two-day shipping, streaming of movies and TV shows, and other benefits to college students. You can sign up for a six-month free trial, and after that, it costs $6.49 per month or $59 per year.
Show teens the benefits of saving money
Talk to your teen about the benefits of saving money by sharing real-life examples, such as how saving helped you achieve a financial goal or how it helped you through a difficult time. At the same time, discuss the long-term benefits of saving money, such as being able to afford a down payment on a car, paying for university without loans, or being able to go on vacation.
It also pays to show them the power of compound interest and the potential long-term benefits of saving early. By consistently reinforcing the benefits of saving money like this, your teen will be more likely to see the value in why they should save money.
Set a good example
Setting a good example for your teen means being a good money manager. Show your teen how you have different saving goals for items like bills and holidays and longer-term investments and pensions. The more you talk honestly and openly about money and how you save with your teen, the more they will understand the importance of financial planning and saving.
Get a GoHenry prepaid debit card
GoHenry 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 saving, compound interest, spending, and more. This means when the time comes for teens to go off to college and get access to their savings account funds, they will already have the money skills they need to manage their savings wisely.
Learning how to save up money as a teenager is easy with GoHenry. Your kids can track spending with the help of their GoHenry teen debit card. These prepaid debit cards allow teens to save and spend wisely. With parental controls and the ability to set paid tasks in the app, you can assign your kids' chores and pay them directly for the tasks they complete.
Related articles:
Common financial problems for teens
Money management activities for teens
