A teen’s first paycheck is a rite of passage on the way to adulthood. Learning to manage his money is also part of the journey. Here are some ways to empower your teen to make good financial decisions, and strike a balance between saving and spending his pay.
Open a checking account
Having a place to put his money reduces the likelihood of your teen spending or losing it. It also opens a door to the world of adulthood. This is a great time to tell him that as long as the money is in the account, it earns dividends every day. So it’s like getting free money.
Agree where each paycheck goes
Give your teen the freedom to make choices from options that you give him. Find out from him what his goals are and let him choose how to reach those goals. For example, let him choose between helping pay a certain amount toward a used car or contributing toward the cost of auto insurance, and gas to use the family vehicle. This will not only make him feel in control of his money, but it will also ease your financial burden.
Compare needs to wants
For a working teen, learning to focus on what’s most important when tempted to spend money is tough, but necessary. Think of a time you regret choosing wants over needs and share that memory. Again, give him choices and make sure he understands the consequences of satisfying all of his wants in the moment.
Share your stories about early jobs and how you learned to handle money as you became a young adult. He’ll especially enjoy — and learn from — hearing about mistakes you made! Don’t be afraid to let him make some mistakes, too. Learning to be accountable and finding ways to adjust are valuable lessons. Once your teen shows he is learning those lessons, you can reward him by matching all or a portion of what he saves as extra motivation.
Spending and saving is about choices. Learning how to strike a balance could be the most important thing you teach your teen. Don’t ignore it — support it!
Article provided by Local Government Federal Credit Union.
The advice provided is for information purposes only.