You don’t want your teen going off to college with no idea how to budget, save, or make income, do you? College is expensive, and your teen will have to learn how to go about their lives without Mom and Dad backing them up every step of the way. One of the best ways to prepare your student for more financial independence is to teach them how to build savings for big-ticket items and rainy days. You can help them prepare for college with these money-saving strategies.
Help them set up a bank account
By the time your teen is thinking about college, they should definitely have a bank account set up. Take them to a local branch of their bank and introduce them to a teller or customer representative so they can ask questions about how their account works and what features the bank has to offer. A common feature that might benefit them is interest rates. You or the teller should help your teen understand how they work so they can take advantage of them to help their savings grow. Banking is a lot easier these days with the help of mobile apps. Most teens are on their phones a lot, so while they’re on it, get them familiarized with their bank’s app. Walk through their statements with them and show them how to track their spending so their savings don’t get away from them. Forming the habit of checking bank account statements will make them more conscientious about how much they’re spending.
Related: A Beginner’s Guide to Financial Responsibility
Introduce them to budgeting strategies
Budgeting is the true key to saving money because it shows where their money will consistently end up. You could incentivize your teen to learn about budgeting by pointing out pricey items they have on their wish list like a new phone, car, or instrument and explaining how they might raise the funds to purchase it. By encouraging them to put away a little bit of savings each month, they can calculate how long it will take to purchase something off their wish list.
Reframing saving as budgeting for a big purchase might prevent your teen from bad decision-making with their money. Sacrificing going to the movies or going out to eat a lot in favor of budgeting for a new car will teach them the value of building savings and influence them to be smarter about saving up for college. There are a variety of apps that help with budgeting too. Suggest apps that calculate monthly income and track spending so they know if they are generally spending more or less than they earn.
Related: How to Save Money for College as a High School Student
Show them how to track costs
A lot of teens are unaware of how much basic survival really costs. If they don’t regularly pay for gas, utilities, food, or clothing, they may have a skewed view of how much money they should save for college. To get around this misconception, have your teen pay for their own stuff consistently. The more they have to pay their own bills with their own money now, the more they’ll want to have a safety cushion for when they go off to school. Another way to teach them the true cost of living is by outlining the family budget for them. Show them where your money ends up and how much money it takes to sustain your family. This is a huge educational moment for your teen, and they might appreciate money management skills even more if it’s more personal to their lives. They’ll come out of it with a better idea of what living on their own in college might cost so they can budget accordingly and start saving.
Support them in finding a job (or an additional one)
The only true ways to save money are to reduce spending and/or increase income. As your teen becomes more aware of their monthly spending, they might want to have the freedom to spend more or start doubling down on saving for the future. This is where picking up more jobs comes into play. As a parent, you can help your teen get a new job by teaching them how to build a résumé and figuring out what they might enjoy doing. Try introducing them to a friend with a business that’s looking for extra help or drive them to the mall with a stack of résumés to drop off to businesses. It’s important to support your teen in finding a new job so they’re excited about the extra income instead of discouraged by a fruitless job hunt.
With another job under their belt, your teen will build their résumé for future jobs that will help sustain them in college while also building up that savings account. Additionally, you don’t want them coming to you every time they run out of cash. Demonstrating that getting a new job is a great way to boost their savings and build skills may inspire them to find more ways to earn money other than asking Mom and Dad.
Related: 4 Benefits of a College Job, Plus Tips for Finding One
Before you know it, your teen will have a sizeable savings account to take to college with them. By showing them budgeting techniques, making them responsible for their own expenses, and giving them tips to increase income, your teen will be much wiser about their money. The more they learn to save while they’re young, the less likely they are to run into financial problems down the road, giving them more freedom to enjoy college life.
Plan a day to sit down and use our Scholarship Search tool with your teen to find money to put toward college.