Teen Flying Through Funds? Talk It Over.
For teens, making money feels great! Getting your first paycheck is exciting – you earned it. First jobs can be challenging, but the reward of making your own money makes it worthwhile. It's not uncommon to feel like you deserve to 'splurge' for working hard.
As a parent, it is important to help your earner make wise decisions with their newfound income. If they don't already have a checking and savings account, this is the first step. Having a place where they can monitor their spending online or through an app is a great way to integrate their love for technology.
If their job allows for it, have them set up an automatic payment to go into their savings account so they don't "forget" – even if it's just 10% of their paycheck. Chances are, they'll get excited to see this grow over time, and might even contribute a little more.
Another suggestion is to have them start chipping in for their cell phone payments so they know how it feels to keep money set aside for something they really want or need.
It's also important to educate them about the cost of college, car payments, auto insurance, and other necessities. Sit them down and show them how long it might take to reach a savings goal. For example, if they needed $5,000 for a down-payment on a car, and they put only $20 a week aside, it would take 250 weeks to save up for that (without interest) – that's almost five years! They might consider putting more aside instead of making another trip to Chipotle.
Overall, we believe that knowledge is key. Understanding the cost of utilities, mortgage payments, car payments, groceries, phone bills, and other expenses gives them insight into why working, and saving, is so important now and in the future.