(NC) Teaching our children about earning and spending is fairly common practice. But what about saving? What did you first save for? How did you learn to save? Learning how to save can be one of the most valuable – and rewarding – financial skills we can pass on to our children.
As your kids get older and start budgeting and saving for post-secondary expenses, this is the ideal time to have conversations around money to help them how to manage their personal finances.
Emily Steen, senior manager of student banking at RBC, has some tips to help post-secondary students recognize saving as one of the core money principles it truly is:
Create a budget. Post-secondary students can underestimate how hard it is to stick to a budget. According to a recent study, over 50 per cent of students said that budgeting is more important than they thought when starting school.
Tracking money is important to be able to stick to a budget. Empower your teen to conduct this quick budgeting exercise each month: start with their net income (this is all the money that have coming in such as: support from parents, financial aid, earnings from part-time employment, etc.) and then subtract all of the expenses (tuition, housing, food, social costs and outings with friends, trips home etc.). From here they determine if they have anything remaining (“disposable income”), break even or are overspending.
Create a disposable income. A disposable income is often not a reality for teens. A great tip for your teen to find a little extra cash is to try to eliminate small expenses when they can. Maybe it’s as simple as a regular coffee instead of a latte, or waking up early and walking to school vs. paying for transportation. Getting them to think this way is the first step. Suggest they save or even invest whatever they’re able to save. It doesn’t have to be a lot – any start is a great start!
Work towards a goal. Putting money aside to accomplish a short-term goal is a great way to start saving. It could be anything from an upcoming concert or a trip for reading week, but setting a goal that provides a reward when reached can help them prove to themselves that they can save.
Make money off your money. Consider providing your teen with an incentive or matching program to save. For example, for every $100 they save, you match it or top it up an increment of your choosing. To help them continue to grow their earnings, assist them with investing their savings in a High-Interest Savings Account or a Tax Free Savings Account.
Find more information at rbcroyalbank.com/student-solution.