Teach Your Teen How To Manage Money
Your kid landed a summer job in this tight, tight economy. How are you going to teach him or her how to manage money?
Here are some suggestions:
Talk about taxes
Explain the difference between gross and net income. Say that taxes will be deducted from every paycheck. Discuss what each item in the pay stub means.
Go to the bank
Open two accounts — one savings, one checking. Comparing fees and rates online, and look for a no-fee checking account meant for teenagers. Co-sign the accounts, but let your kid can start learning to use an ATM card and keep his balance in the black. Make sure you also explain about the $30 overdraft fees the bank will rapidly bestow if he messes up budget calculations. And remind him that at minimum wage, it would take most of a day's work to recoup that expense.
Explain what saving means
Deferred gratification is an important lesson. Let your kid have a saving goal, like maybe buying an iPod Touch or a limo for homecoming. Sit down together and calculate how much time your kid needs to set aside a fraction of his paycheck to afford a prize by summer's end. As an incentive, offer to match your child's contributions.
Don't micromanage
Let blowing that first paycheck on shoes that will be out of style before the next check arrives be a lesson for your kid.