Tag Archives: Saving

Teach Your Teen Paycheck Savvy

Teach Your Teen Paycheck Savvy

By Linda Stern

From CNN Money Magazine

Congrats! Your kid landed a summer job in this tight, tight economy.

Now, of course, he’ll have that $7.25 an hour burning a hole in his pocket. That’s where you step in: “Parents have a real opportunity to help teens learn to manage that first paycheck,” says Mari Adam, a Boca Raton, Fla., financial adviser. “I can’t think of a better learning experience.” Share some solid financial strategies with your teen now, and your child may even have some cash left over come September.

Have the tax talk

Better explain the harsh realities of gross vs. net before your teen gets any big ideas about what she’ll spend her wages on. She may not yet understand that taxes will be withheld from every paycheck. So sit down with your child to go over that first pay stub, explaining how and why taxes are taken out, as well as the difference between income taxes (which most teens are likely to get back when they file tax returns) and FICA taxes (which they won’t). “This will be a real shock to them,” says Adam.

Take it to the bank

Help your kid open two bank accounts — one savings, one checking. Spend time together comparing fees and rates online, looking specifically for a no-fee checking account meant for teenagers. You’ll have to co-sign the accounts, but it’s worth it so your kid can start learning to use an ATM card and keep his balance in the black. (Just don’t forget to mention the exorbitant costs of using another bank’s ATM.)

Your child may balk at an analog check register but might enjoy tracking expenses online via Mint.com. To motivate him, 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.

Share the savings secret

Deferred gratification is an important lesson. Your teen may not be inspired to stash cash for retirement but may be swayed to the savings habit with a near-term goal, like an iPod Touch or a limo for homecoming. Help her do the math so that she’ll know how much to set aside per paycheck to afford her prize by summer’s end. Show her how to have that automatically transferred from checking to savings every pay period. As an incentive, offer to match your child’s contributions.

Avoid micromanaging

Blowing that first paycheck on shoes that will be out of style before the next check arrives is a rite of passage, isn’t it? It’s also a “very good lesson,” says Rob Gordon, a Coconut Grove, Fla., financial adviser. So let kids have space to make spending decisions, even if they’ll end up with buyer’s remorse.

There’s nothing like having wasted your own hard- earned cash to make you more careful with your money next time.

Money Savvy Pig can teach us Adults a few Tricks

Susan Beacham, founder of Money Savvy Generation,  writes books, curriculum and tools for children.  It  helps Parents and Grandparents teach them how to understand money.  She mentions money management as a critical life skill.  Wow, what a concept!  Remember,  our children may not always do what we say but they see what we do!

How are Millionaires Made? by Joann Seymour Kuster

image001 (2)

Joann Seymour Kuster

Author, Financial Educator

Much of a young person’s paycheck withers away, because most haven’t learned to pay themselves first. Saving and investing is not a habit yet. But it can become one. Learn to pay yourself as much as you can –invest and grow a nest egg for later.

You don’t know how to invest? That’s because most parents and schools don’t teach teens the money management skills needed. We just expect you to absorb our habits.

Learning to invest is no different than learning to read, swim, or play piano. To be good, you practice. The better you become, the more success you see. And, there’s nothing like practicing with your hard-earned cash!

How else are you going to become a millionaire? It’s possible, you know…to be a millionaire

How do most millionaires actually become millionaires?
The most important sources of wealth for millionaires are holdings of stocks, bonds and mutual funds (23%) and business assets (21%), according to America Saves. It is not an inheritance or lottery win that makes most millionaires.