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Savvy savings and spending habits can prepare teens for a lifetime of financial responsibility. For most, that means having a summer job in high school that affords them the opportunity to earn and save cash during the summer vacation. To help teens start smart, here are five tips to help build lasting, responsible summer savings and spending habits.

1. Have the "Money Talk"

Teens learn financial habits from their family and friends. A first summer job will help them understand the value of a dollar and the necessity to save as they transition from being dependent on their family to being more self-reliant. Talk to them about why they're working, what they hope to accomplish with their earnings, and how much they plan to save versus spend. These teachable moments allow grandparents and parents to share stories about what they learned by earning their own cash, and it's a great way to bond through family experiences while teaching disciplines like budgeting and saving.

2. Living on a Budget

Along with that money talk, be sure to discuss how the money your teen earns will be used. Instead of dictating goals for their savings and spending, ask them to outline a plan. Start by having them map out what their summer savings and spending will look like and how that might carry into a part-time job during the school year.

When budgeting, teens should set money aside for different needs. Perhaps some money can be allotted for some fun in the sun while the rest is put toward supplies and new clothes for the new school year. Some may even be thinking about saving for college — in which case, it may be a good idea to set money aside for textbooks and trips home during the holidays.

3. Establish a Savings Plan with Specific Goals

When your teen maps out what will be saved and spent, let them play an active role in setting up their financial accounts. Savings accounts inspire teens to consistently put money away, and reward them for their savings habits and financial wellness.

When they build their personal spending and savings plan, ask them what percentage of each paycheck they'll commit to their savings. Learning to set aside and save a portion of their pay helps to prep your teen for their career years where they'll need to use part of their income to save for personal and company retirement plans, and liquid savings. You can even consider adding a bonus contribution to their savings as an incentive if they hit their savings goal.

It can also help to work together to come up with specific savings goals to work toward. These goals can range from saving for a big purchase or a vacation with friends to something as simple and fundamental as paying their bills on time. You can also help instill a desire to do good by encouraging them to donate to a favorite charity as their savings plan allows.

4. Debit Card Discipline

Debit cards are often issued with both savings and checking accounts. They're also a powerful tool for teens to have complete transparency with their savings and spending. Let them know that they may be able to designate automatic deposits into savings while using some debit cards to fully track spending through their checking account.

By encouraging your teen to use a debit card and track their spending online, you lessen the chance of cash expenditures that siphon from savings. There's nothing quite like the end-of-month reality that they spent ten dollars a day on coffee or frappes which put a serious dent in their savings goals. Debit cards, unlike credit cards, are linked to real money currently held in the bank and have an immediate impact on financial health. Be sure that teens understand that they shouldn't leave debit cards lying around or share their PIN with friends. It's also important that they understand the difference between credit card and debit card transactions. Learning about debit card discipline can help set teens up for both savings and credit success in the future.

5. Separating Needs from Wants

Speaking of fancy coffee — it's an enjoyable treat, but is it necessary? Teaching your teen the difference between needs and wants can help to establish wise spending habits early on. While fancy gadgets and the latest tech might have a magnetic allure, talk to your teen about wants versus needs, the power of savings, and how the goals they've laid out in their summer savings plan can be hampered if needs aren't prioritized over wants.

Helping your teen establish a savings and spending plan will be one of the first opportunities to lay a foundation for their financial future. Through open and honest conversations, collaboration, and accountability, that extra cash from a summer job can pave the way to a lifetime of responsible savings and spending habits.

Disclosures

This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

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