Savvy Tips to Help Your Teens Save and Invest Like Pros

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Savvy Tips to Help Your Teens Save and Invest Like Pros

Nov 01, 2024
financial goals financial literacy micro-investing superannuation teen savings

Savvy Tips to Help Your Teens Save and Invest Like Pros

As your teens start earning their own income, financial literacy becomes more than just a good idea—it’s essential. With money in their pockets and plenty of things they’d love to spend it on, saving and investing might be the last things on their mind. But don’t worry; there are fun and effective ways to encourage your teens to make smart financial decisions.

 

1. Make Technology Their Saving Ally

Let’s face it, teens are glued to their devices, so why not use that to their financial advantage? Plenty of apps now “round up” purchases and deposit the spare change into a savings or investment account. This means they’re saving and investing without even thinking about it.

Pro Tip: Look into micro-investing apps that let them dip their toes into the stock market. These apps make investing accessible and introduce concepts like risk and diversification, showing them how money can grow in the background while they go about their day.

 

2. Offer to Match Their Savings Goals

There’s nothing like a little extra incentive to get teens motivated. Offering to match their savings can be a powerful tool. Sit down with them, set a realistic goal, and encourage them to reach it. Knowing they’ll get a reward at the finish line reinforces good habits like delayed gratification and the importance of a “rainy day fund.”

Pro Tip: This can be a great time to teach them about financial goal-setting. For example, saving for a specific item or experience can make the process feel more purposeful and rewarding.

 

3. Show Them the Magic of Compound Interest

Compound interest is the ultimate game-changer when it comes to saving. Encourage your teen to choose high-interest savings accounts so they can see their money grow. Show them how even small amounts saved consistently will snowball over time, thanks to compounding.

Pro Tip: Explain that compound interest is like giving their money “superpowers”—the more they save, the more they’ll earn, just for keeping their money in one place.

 

4. Provide Free or Discounted Accommodation

If your teen is ready to live on their own but struggling to save, offering them rent-free or reduced-rate accommodation can be a huge help. This frees up more of their income to put towards savings or investments. Plus, they can give back by helping out with chores or running errands.

Creative Twist: If your child has been living with you or moved back after being on their own, consider charging a small board but set it aside for them in a “future fund.” When they’re ready to buy a home or take the next big step, this fund will be a welcomed boost.

 

5. Top Up Their Superannuation

Superannuation may not be top-of-mind for your teen, but it can be a powerful tool for building long-term wealth. Contributing a little to their super, or matching their own contributions, can set them up for a secure future. Compound interest will work its magic, turning even modest contributions into significant growth over time.

Pro Tip: Explain that even though they won’t access their super for many years, a small contribution now can mean a lot down the road. It’s like planting a tree that will keep growing long after they’ve forgotten about it.

 

Final Thoughts: Celebrate the Wins

Your teen’s attitude towards saving and investing will evolve, but the foundation you help set now will serve them well for years to come. Celebrate their milestones—whether it’s reaching a savings goal or making their first investment. Positive reinforcement goes a long way in building financial confidence and excitement.

With the right tools and encouragement, your teens will develop money-savvy skills that last a lifetime. Financial literacy doesn’t have to be boring—show them the potential in every dollar, and watch them take charge of their financial future.