A summer job is a great way for your teen to show responsibility and develop a solid work ethic. It’s also a good time for you to talk to your child about developing good financial habits. Here’s how you can help your teen manage summer job pay.
Outline money needs and wants
Whether it’s spending on something fun or saving for college, teens generally need direction when it comes to making smart money decisions. Start your lessons by discussing short- and long-term goals. Create an agreement with your teen, such as one that covers allowance, loans and joint purchases. Outline how much your teen can spend on having fun and how much to save for future goals like college or a car. If you plan to help with big savings goals like college, be clear about how much each of you will contribute. If your teen’s savings goals don’t involve a big commitment, that’s OK. However, it’s still important for your teen to learn to save some money for later.
How can teenagers save up money?
With an agreement in place, it’s a good idea for your teen to have paychecks directly deposited into a teen savings or checking account. Your teen can divide the funds so pocket money goes into the checking account for everyday spending and the remaining balance stays in savings for long-term goals. This way long-term savings is out of sight and out of mind, reducing the impulse to spend it.
If your teen shows responsibility with money, it may be time for a debit card. This allows your teen to make purchases and get cash from ATMs. But you’ll want to routinely review the account together, and teach your child to keep a close eye on the account balance. You may even want to give your child log-in credentials for Member Connect to track the account. Without Wi-Fi, data fees may apply. Check with your service provider.
This is a good first step toward helping your teens avoid insufficient funds fees. It’s times like this where overdraft coverage can help them avoid getting hit with fees that could shrink account balances. Next, demonstrate how to use monthly statements to reconcile accounts. And it wouldn’t hurt to model how to write a check too!
Even the very young can earn and save
Teens aren’t the only ones who can make and save money during summer. For younger kids, there are many ideas to help your young child earn money. Mowing grass, helping a neighbor and creating a lemonade stand are good opportunities for young children to boost a child savings account.
Finally, make time together to review budgeting skills. Your children need to understand that if they spend more money than they make — or more than they have agreed to spend — they will need to adjust their actions going forward to get back on track.