Teaching Kids to Save Money

All you can do is try to establish some rules or guidelines for her to follow. Explain that you want her to learn the lessons of Real Life. The lesson is that you can't spend all that you make. You really do have to budget your money. Budget may seem like a dirty word, but it's not—it's discipline (another dirty word). Smart planning now will allow her to push off instant gratification and really save for what she may want later.

Depending upon what she is earning (and the deductions that are taken out of her paycheck, if she's employed by a business), she may have to pay taxes. You want to start there. Even with younger children, I teach them a simple work-for-pay allowance system, and they have to divide their earnings: 10 percent for Charity, 30 percent for Quick Cash/Instant Gratification, 30 percent for Medium-Term Savings (that is, they set a goal and save for it) and 30 percent for Long-Term Savings (ultimately to be used for college or a car). This is basically the same with your teen.

Help your teen to pick a charitable cause that she is passionate about. Next, help her pick a savings goal: maybe a new phone, an ipod, whatever she wants. Set up a savings account and remind her to deposit a portion of her paycheck each pay period. She also needs to think about contributing to her college fund, if that is what you want.