Why do most teens get a job? So they can earn money and spend it, right? Well, evidently not.
A new survey conducted by TD Ameritrade Holding Corp. shows that 63 percent of teens save their money to help pay for college. This is much higher than our parents’ generation. Only 40 percent of the generation before us saved money when they were teens. This finding was somewhat unexpected. Most adults assume that if teens are actually saving their money, they will spend it on the latest fashions, entertainment, or electronics.
In response to the new trend, Joseph Peri, CEO of the Council for Economic Education, said “it’s a pleasant surprise that we’re seeing young people paying that much attention to the importance of this issue. Part of teaching the importance of investing is showing that the best investment a young person can make is an investment in themselves.”
So why are today’s teens more likely to save their money than their parents were at their age? TD Ameritrade Holding Corp. thinks it is because today’s teens are not required to pay for their own expenses, such as transportation and food. As a result, teens have a larger cash flow then their parents probably did.
“One concern would be that when the focus is on saving for such a long-term goal and their parents are taking care of their day-to-day expenses, are they really learning how to manage cash flow?”” asked Diane Young, director of retirement and goal planning at TD Ameritrade.
It doesn’t really matter why teens are more likely to save money; what matters is that they are developing the financial skills they will need as adults. In fact, almost 90 percent of teens are saving their money for something, even if it is not for their future education.
If you want to start saving and becoming more financially literate, don’t try to deposit your entire allowance or monthly salary in the bank. Start small; maybe 10 percent of your income. And try not to think of it as depriving yourself: that money is still yours and you can still use it if you want it. You’re just learning smarter financial habits, which will pay off in the future.
Via Associated Press