A teen’s first paycheck is a rite of passage on the way to adulthood. Learning to manage 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.
Open a checking account
Having a place to save 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 remind your teen that as long as the money is in the account, it earns dividends every day. So it’s like getting money for nothing.
Agree where each paycheck goes
Give your teen the freedom to make choices from options you both agree on. Ask what their financial goals are and let them choose how to reach them. For example, let your teen choose between contributing 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 allow your teen to feel in control of their 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 is necessary, but tough given the frequent temptation to spend. Share a memory of a time you regret choosing wants over needs. Again, give your teen choices and make sure your young adult understands the consequences of satisfying all of their wants in the moment.
Next, be open about your early jobs and how you learned to handle money as you became a young adult. Your teen may especially enjoy — and learn from — hearing about mistakes you made! Don’t be afraid to let your teen make mistakes, too. Learning to be accountable and finding ways to adjust are valuable lessons. Once your teen shows they are learning those lessons, consider rewarding your teen by matching all or a portion of what your young adult saves as extra motivation, if you can.
Finally, spending and saving is about choices. Take in these tips to help your working teen manage their pay.
Article provided by Local Government Federal Credit Union.
The advice provided is for information purposes only.