To teenagers, saving money now may seem a bit silly. But it’s their age that makes saving so important. They have time on their side—and it is our role as parents and caregivers to help them understand and take advantage of this.

There are three factors that affect savings accumulation:

1. The amount you save
2. The rate of return (interest or earnings rate)
3. The length of time you save

Time is probably a young person’s single greatest asset. So the sooner you start saving, the better. Consider this example:



Two sisters each have $200 extra each month. One sister, Mary, decides to start saving that money immediately and puts her $200 in the bank each month for 10 years.

Mary’s sister, Sue, decides to spend the extra money each month on clothes, CDs and other incidentals. After two years of spending, she buckles down and also puts $200 a month into a savings account.

At the end of 10 years, assuming an annual 5% interest rate, Mary ends up with over $7,000 more than her sister simply because she started saving earlier.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The type of savings and investment strategies mentioned may not be suitable for everyone. Each investor needs to review a security transaction or strategy for his or her own particular situation. The examples mentioned are for informational purposes only and are not intended to represent results you should expect in the future. Data contained here is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.