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Finance 101: Saving as a young adult

A teenager’s years are often the time in their lives when the value of money, and how to earn it, become essential. According to a Brookings Institution report, over the last 15 years, the amount of 16 to 19 year olds who are working has gone down from one-half to a third. About 1.1 million teenagers want to make money and work, but can not find a job, according to the Bureau of Labor Statistics. Young teens, both girls and boys, have to compete in the job market against more qualified adults who are vying for the same positions. Because of a teenager’s desire to have money, learning to save is a vital habit that takes many years to build. Considering these statistics, here are some ways for young girls and teenagers to begin building their savings and learn money management.

Speaking from my experience, the best way to be enticed to save money is to work towards a purchase or spending goal. Every year during the holidays, it can be tempting to blow through money on meaningless purchases because it seems pointless as a kid to put that money in the bank. However, if a teenager is motivated to save for something specific, they will be eager to put money in the bank and create a saving plan to calculate how long they will need to save. A good savings calendar may include when and how much their allowances are, how much holiday money they have, and what withdrawals they are making. Keeping track of this information on a phone or calendar not only helps one save for a goal, but it also teaches young adults to calculate their savings rate, learn to save, learn to calculate expenses, and determine the amount of cash flow they have going in and out of their bank account. To encourage young adults, parents can also contribute to the goal and add incentives to save. Whether it is a fun beach day or going to see a movie, these incentives will help remind the saver of their goals.

Giving kids an allowance also helps teach them the value of money and the importance of hard work. By giving young girls a budget and allowance, they will learn the value of living within their means. This is the foundation of saving money and spending responsibly as an adult. Parents can offer chores in exchange for money. This further teaches teenagers the importance of working hard for money and using it responsibility. When kids work diligently to earn cash, they spend it more wisely because they understand how much work was required to earn it. In fact, many kids will create a budget to learn how much they earn weekly, monthly, and so on. As young adults begin to work, either at home or at a job, they begin to weigh their wants and needs. Teenagers will be forced to make decisions about if they would rather have money for food while out with friends or buy more clothing. This is a crucial part of budgeting as a teen and as an adult.

Lastly, young girls should ask their parents to set up a place for them to save. For younger kids, this may simply be a piggy bank or jewelry box; but, as kids become teenagers, they should ask if they can open their own savings or checking account. Some teenagers who work might want to have both accounts because it allows them to see what money they can use for daily expenses (checking) and what they want for the future (savings). Checking accounts are suited for everyday transactions and purchases because they earn less interest and can easily be connected to a card. Teenagers can learn how to use a card responsibly when they open a checking account. On the other hand, a savings account is better for storing money and gaining interest. A savings account or a checking account will allow kids to see their savings add up and allow them to track the progress they have made towards their goal.

If you’re a young adult, learning to save will greatly help you when you go to college and enter adulthood. For parents, making saving an everyday part of your child’s life will lead towards a strong financial future. The tips outlined worked for me and are a great way to start the conversation!


BY: Kenedy Quandt

Sources and Further Reading:

  1. https://www.investopedia.com/personal-finance/10-tips-teach-your-child-save/

  2. https://www.brookings.edu/wp-content/uploads/2014/03/Youth_Workforce_Report_FINAL.pdf

  3. https://www.investopedia.com/articles/personal-finance/071615/7-finance-books-every-teenager-should-read.asp

  4. https://bettermoneyhabits.bankofamerica.com/en/personal-banking/money-management-for-teens





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