This is the second in a series of posts designed to help you help the teens in your life. We all need to have a foundational understanding of finances, but who more than those on the cusp of adulthood? This series will give them the financial groundwork they need to make wise decisions in the future. Lesson two will cover saving for the future.
***Coming Soon! This will be available as a full course with activities, printables, and a printable textbook/workbook. Sign up below to be notified the moment it is released.
Learn about saving money
Now that you understand how much money you have, you are probably much more careful about what you spend your money on. Now that you have this awareness, you need to learn to truly be in charge of your money. You need to be the boss, and decide how you use your money.
Your money needs a plan!
The future will hold a lot of financial surprises, and you need to set up a plan now, so you will be prepared.
The first and most critical thing you need to save for is an emergency fund. It may be difficult to think about, but things go wrong, and you will need the money to fix them. Think of some things that could go wrong. How would you handle these situations? An emergency fund is money you set aside for the purpose of dealing with unexpected emergencies. You don’t use this money to go shopping. You use it if your car breaks down. See the difference?
How to start?
A great emergency fund has at least $1000 in it, and is locked in a safe place like a fireproof box. Your goal today is to set aside 10% of what you currently have. Put it in a labelled envelope and ask your parents to put it in a safe place, again, a fireproof box is great. As you are able, continue to add to your emergency fund until it reaches $1000.
Saving for a car
Would you like to buy your own car at some point? The time to start saving is now. To understand what you would need to save for a car, you need to check some prices. Look at the used car ads in the paper. How much does it cost to buy a used car? There are also additional expenses to owning a car.
It’s important to have a realistic picture when you plan for a big purchase like a car. Set up your car savings like your emergency fund. Get that money out of your wallet and put it in a cash envelope tucked away, or put it in a savings account in the bank. Any time you save for something big, you need to get it out of the way, so you don’t spend it when you go to the store. It’s a good practice to only keep a very small amount of money with you when you go out.
Saving for a house
Houses are another big purchase to think about. Do you have a dream house that you would love to live in one day? Again, it’s important to start by having a good understanding of the cost. Check local real estate listings for prices on rent. If you choose to purchase a home, you will need a mortgage. Houses also bring additional costs.
- Property tax
- Upkeep such as lawn mowing, repairs, snow removal, etc.
- Utilities: electric bill, water bill, heat, garbage pickup, etc.
The importance of planning
-I have covered some big and very important savings goals, but you may also want to save for smaller things. Do you have some things to add to your savings list? Any time you want to make a bigger purchase, you need to plan. Start with a small amount, and either put the cash in an envelope, or put it in a savings account. You can break down your goal as well. For example, if you want to purchase something that is $500, and you would like to be able to purchase it in 6 months, you would need to add about $21 to your savings every week. Taking the time to do the math enables you to determine if this is a realistic goal.
What big thing do you want to start saving for? Don’t forget to start with an emergency fund!
These lessons are being turned into a full personal finance course for teens! The course will have a full printable write-in textbook with hands-on activities, printables, quizzes, assignments, and Scripture. Sign up below to be notified as soon as it becomes available.