From Allowance to Affluence: How to Get Teens Saving for the Future

Inspiring your teenager to save for long-term goals can be a unique challenge. This opportunity will compete with many appealing short-term goals that could easily outshine locking up their money for decades. However, saving while young is one of the most valuable financial strategies. A lifestyle of consistent long-term savings will benefit them for years to come. Here are four strategies that may inspire your teenager to create a long-term savings habit.  

1. Show a compound investment chart. Using visuals like the one below shows the major financial advantage to young people who make long-term savings a habit early on. In this chart, the savings rate of $200 per month and annual interest rate of 7.25% are the same for each person, only the amount of time the money grows changed. The difference in ending values demonstrates the power of saving early and growing your money with compound interest. Visuals like this can highlight the benefits of long-term savings where words cannot.

  
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2. Show your long-term savings contributions. An overview of the contributions to your own retirement account can help inspire teenagers to do the same. This helps them understand it is not an isolated chore unique to them, but a good habit everyone should try to practice. 

3. Match their savings. Inspire long-term savings by matching what your teenager contributes to their savings accounts. For example, if your teenager is working and contributes $3,000 of their earned income to a Roth IRA, you can match by gifting an additional $3,000 to their account. When contributing to an IRA or Roth IRA, as long as the total contributions do not exceed their earned income for the year and the annual limit ($7,000 in 2025), this can be another powerful way to increase their excitement around savings. 

4. Set and celebrate benchmarks. Encourage healthy long-term savings habits by celebrating when they meet their savings goals. For instance, celebrate goals surrounding consistent contributions or reaching a certain balance after a set number of years in their long-term savings account. These short-term celebrations help positively reinforce the long-term habit of deferring immediate enjoyment of their money.² 

Every teenager is different, and some strategies will help more than others. The main goal is to find what excites them and connect that to building a strong long-term savings habit. Through trial and error, you can work together to find a strategy that works best.  

Two vital decisions for your teenager’s savings strategy are the type of accounts they open and the funds they invest. Talk to your financial advisor about which options are best suited to help your teenager most efficiently meet their long-term savings goals. 

Resources:  

1. What is your Investing End Game? | Mortar Group (image)
2. COLA increases for dollar limitations on benefits and contributions | Internal Revenue Service 

Disclosures: 

Apella Capital, LLC (“Apella”), DBA Apella Wealth is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempt from registration requirements. Registration with the SEC or any state securities authority does not imply a certain level of skill or training. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, product or any non-investment-related content made reference to directly or indirectly in this material will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Diversification seeks to improve performance by spreading your investment dollars into various asset classes to add balance to your portfolio. Using this methodology, however, does not guarantee a profit or protection from loss in a declining market. Past performance does not guarantee future results. All data is from sources believed to be reliable but cannot be guaranteed or warranted.   

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