Teach Teens to Save Money for Big Purchases

Sit down with your son and have him figure out how long it would take him to work and save up for the things he wants. Let him decide what is most important to him. Is it the video game or the car? That way, he gets to choose, not you.

If he is working and saving money, maybe you could match him dollar for dollar. I call this the 401(k) matching plan. This will be an incentive for him to save his own money. Or when it comes time for a car, maybe you will lend him your car, but he has to pay for his insurance, gas, etc.

Beyond that, if and when he wants his own car, discuss his plans for getting one. But remember, you have to know your own rules before you have that conversation (for example, are you buying it all? Sharing the cost? Will it be new? Used?). Take him to your insurance agent and have that person explain how much extra it will cost to insure your son. Also, let your son calculate how much it will cost for gas per week.

Our kids never really understand the true costs of things. It's important for him to be directly involved in the dollars and cents, so you don't have to resort to simply nagging him about money.