Money Matters for Your Teen’s First Job

So, your teen got their first job this summer. Whether it’s babysitting or working at the local movie theater, a job is an opportunity to learn life lessons – everything from time management and the value of hard work to customer service and communication skills.

Since we’re believers in financial education, we think one of the most important skills a first job teaches teens is money management. And there is no time like the present to talk money matters. Here are some basics to get you started.

Allow your teen financial responsibility

When a teen lands that first job, the conversation in the household may change from “Can I have money for the movies,” to “I’m going to the movies. I’ve got it covered.” This can be a welcome transition to any financially-conscious family. Allow your teen the freedom to revel in their newfound financial independence but set guidelines and establish clear expectations about what they should pay for and what you’ll pay for. You want your teen to spend wisely and plan ahead for non-necessities that you might not be willing or able to purchase.

First accounts

Instead of using a check cashing center or depositing a check into your own account for safe keeping, help them set up their own savings or checking account. This will allow your child the opportunity to learn critical money management skills. Choose a low- or no-fee checking account with a debit card and make sure it’s protected from overdrafts. That way, if there is no money in the account, the charge will be declined, which avoids potentially costly overdraft fees. Over time, as your child learns responsible spending habits, this valuable feature can be added in.

Teach saving

Saving is a learned skill that takes repetition. Here are two approaches to saving that might make this habit easier to form. The first is the “Rule of Thirds” approach in which 1/3 of a paycheck is used for fun, 1/3 is saved, and 1/3 is donated to a charity. The other is the 10% rule in which 10% of every paycheck is locked away into a savings account. Have your child pick an approach that works best and stick with it for long-term success.

Make it "cool"

Today’s teens are smart phone aficionados and will be comfortable using an app for their banking. Teach your teen how to download their financial institution’s app, login, check balances and account activity, make mobile deposits, and transfer money. Show them that they can also access their account information online through the bank’s or credit union’s website. If you’re not comfortable with online and mobile banking yourself, check in with your financial institution – they are always happy to help.

Be sure your teen understands how to protect their account information. Remind your child to never provide account numbers, Social Security numbers or any personal information to strangers and to check account activity regularly through the online or mobile app. If anything looks unfamiliar, call your financial institution immediately.

Money management can begin at any age – with the first allowance, birthday money from the grandparents, or the first job. Remember, this should be a learning opportunity for your teen. Make it fun and check in regularly as your child dives into this new world of banking. As always, lean on your bank or credit union if you need extra help to keep your child on track.