5 things you can teach your Teenager about saving Money

If there’s one huge gift we as parents can give our kids, it’s the knowledge they need to grow up to be financially stable adults.

But before you can expect kids to happily embrace the idea of setting money aside, they might need your help understanding a few things to make it all click, including:

1 - The value of money

While you may have encouraged your kids to save money for big purchases, many teens still don’t understand all the “whys” behind saving. They’ve never had to pay for things such as unexpected car repairs or monthly expenses like a utility bill.

2 - How bank accounts work

Before teens can truly master money matters, they should understand how money moves around.

They need a solid rundown on the basics, from checking and savings accounts to bank fees, to how debit cards work and what it means to “bounce” a check.

3 - Why you should always “pay yourself first” 

It doesn’t mean splurging on a shopping spree or an expensive restaurant. “Paying yourself first” is the financial concept of automatically routing money into a savings account before allotting funds for other expenses.

Regular, consistent contributions are key to building short-term savings (new car, vacation, etc.) as well as a rainy-day fund and a “nest egg” for the future.

4 - How credit can hurt — and help you

It’s vital that teens understand how borrowing money works, especially since they’re on the cusp of becoming credit-holders themselves. Help them understand that racking up too much debt or making late payments can result in huge interest payments and late fees that will damage their credit score — as well as their ability to borrow money in the future.

5 - The concept of interest

Your kids may not realize that “smart” saving is more than just sticking cash in a jar on a shelf. That’s why you must explain the idea of compound interest to them: When you save, you earn money on the funds you’ve stashed away.

Just don’t forget to stress that the reverse is also true: When you borrow money, you pay money on the money you’ve been loaned.