That first paycheck your teen receives from their first job seems like gold to them. They punched the clock and worked for that money. Now, it is up to you to teach them how to manage it wisely. Most teens have plans for their first check, and it can be a good thing to let them spend it as they would like to. However, this is also an important time to talk about some key topics and what to do after the first celebratory check.
Open the Right Accounts Now
Nearly all teens should have a savings and checking account by the time they get their first job. Prior to that first job, you may wish to encourage your teen to have at least a savings account in place for any money they receive from time to time. However, with that first paycheck comes the need for a way to deposit their check. Most parents will need to be co-signed on the account, especially with the new responsibility of the debit card. Having both the savings and checking account is an ideal way to separate the spending money from the saving. They’ll also want to set up online or mobile banking with alerts to monitor their account properly.
How to Use a Debit Card
Many teens see their parents swipe their card to make a purchase. However, they may not realize the process behind using it. It’s important to teach a teen about how to use a debit card to avoid problems later. They’ll need to understand:
Debit cards withdraw directly from the checking account
Keep their debit card and PIN safe at all times
How to use it properly at a point of sale and ATM
To review and balance their account often
The Importance of Budgeting
As teens start earning money, they may also begin to have some desired purchases. It could be a cell phone. In some cases, teens need to pay for car insurance on the vehicle they own or use. This creates the need to budget. It’s easy to think about spending on clothing and eating out with friends until the realization occurs that there are bills to pay. Some fundamentals of budgeting to know include:
What a budget is and how it works
How to put aside money for each expense they have
How to manage their budget throughout the month
How to Set and Achieve Financial Goals
Another key area to focus on with your teen is goal setting. Teens need to learn at a young age that they cannot just buy whatever they want (you’ll want to help them to avoid mistakes related to credit cards as early as possible). Instead, teach your child how to create financial goals for big purchases and how to save for those items. Here are a few things to talk about:
Determine what their goals are, such as buying a car, paying for a trip with friends, or buying a new wardrobe before school starts
How to move money from a checking account into savings to achieve these goals
How to track their progress and make wise spending decisions throughout the month
Taking these steps helps your teen become a financially savvy individual. They’ll want to make purchases online, use an ATM, and spend day-to-day. However, teaching them about these tasks now helps ensure they are not swiping away their money without any true plan in place. Discuss each one of these areas with your teen to ensure they know how to make wise decisions before they head off to college or out on their own.
We’re Here to Help!
We can definitely help with opening a High-Yield Youth Savings and Checking Accounts. Don’t forget to sign up for Online or Mobile Banking with eAlerts. We also have a ton of budgeting and money management resources available in our Financial Wellness Center. There are quizzes, worksheets, eBooks, and more!