Whether your teen wants to babysit on a regular basis, cashier at the local burger joint or cut the neighbors’ lawns, first jobs offer responsibility as well as a little extra spending cash. However, before they cash their first check, make sure they are ready to make wise decisions on how to manage their new-found wealth.
Many teens are open to listening to their parents on financial matters. According to a 2015 parent and teen personal finance survey conducted by Junior Achievement, 84% of teens say they look to their parents to learn about managing money. And while a majority of surveyed parents agree that their child learns about money from them, more than a third of parents say they do not discuss their philosophy for handling the family’s finances with their teens.
By the time they reach working age, experts agree teens are capable of understanding complex financial topics, such as identifying personal income and expenses, developing a plan for spending and saving, evaluating credit card offers and understanding the long-term costs associated with buying a car. However, they may need help from you on how to apply this knowledge to their everyday life.
Here are a few questions to get your conversation about money started:
- What are your goals? If college is in their future, help them set aside an amount from their paycheck for college. While these savings won’t likely cover the entire cost of tuition, it helps create a saving mindset. According to research from the University of Michigan, saving for college is positively correlated with grades and future college plans.
- What are your wants and needs? Teens know the difference between needs and wants, but are pulled in different directions by their friends’ desires to go for pizza or shop at the mall. Help them prioritize their spending before they are tempted to spend their money without a plan.
- What can you learn from your mistakes? Everyone buys something they regret later—help your teen learn from their mistakes. For example, if they bought a popular t-shirt that they thought they’d wear, but the tags haven’t been removed yet, help them learn from this experience so they can thoughtfully spend their money rather than making snap decisions.
The high school years are a great time for teenagers to start making decisions about spending and saving money before they need to make them independently.