A summer job is a great way for teens to show responsibility and develop a solid work ethic. It’s also a good time for you to talk to them about developing good financial habits. Here’s how to help your teen manage their summer pay so they end up with more than pocket change at the end of the season.
Outline needs and wants
Whether it’s doing something fun or saving for college, teens need direction in making smart money decisions. Start with short- and long-term goals. Create an agreement with your teen outlining how much of their paychecks they will spend on having fun and how much they will need to save for future goals like college or a car. If you plan to help with 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 okay. Remember that a teenager is less likely to be faced with a financial emergency, but saving for a rainy day is just as important as saving for an upcoming event. Saving more of their summer pay now means they’ll have more to spend later when needed.
Create accounts for saving and spending
Once you and your teen agree on how much will be spent on fun and how much will be deposited into savings, encourage them to have their paychecks directly deposited into an LGFCU Zard Checking or Share account. From there, your teen can divide the funds so that spending money goes into the checking account 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 has shown they’re responsible with money, they may be ready for a debit card to make purchases and get cash from ATMs. Routinely review the account with them to keep a close eye on the balance. Encourage them to log in to Member Connect from a smartphone or tablet to track their accounts. Sit with your teen to learn more about overdraft protection. If they choose this service, they can avoid getting hit with fees that could shrink their account balance. Next, show them how to reconcile their account using account statements. And since some places still take checks, it wouldn’t hurt to show them 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, school breaks don’t have to mean no work and no pay. Mowing grass, other yard work and lemonade stands are good opportunities for young kids to boost their LGFCU Fat Cat accounts with money from summer jobs.
Make time together to review budgeting skills. Understanding that if your child spends more money than he or she makes — or has agreed to spend — they will need to adjust their actions going forward to get on back on track. Contact us for more ways to help your teen learn to budget their pay.