Summer is just a few months away, and your teen may be looking forward to his or her first summer job. That upcoming summer job provides an excellent opportunity for you to pass on financial lessons, and to prepare your teen to manage those summer earnings responsibly. Here are a few steps you can take.
Get started on summer plans with your teen. Does your teenage son or daughter already have a job in mind for the summer? Can you suggest a few places where your teen can ask about a job? How will your family manage transportation? If you set these questions in motion now, your family will have a good amount of lead time to figure out those answers over the next few months, and start the summer off on the right foot.
Open a youth bank account for your teen. Many financial institutions have bank accounts that are tailored specifically for teens. These accounts often eliminate monthly fees, and may not require minimum balances. Some youth bank accounts have debit cards attached to them, which can give your teen his or her first experience in managing money with a debit card. You can research different youth accounts with your teen to find the best fit, so you can be sure that he or she has a place to deposit savings as those summer earnings come in.
Check with financial institutions for their age requirements on youth accounts. Even if your teen does not plan to start a summer job, you can still introduce them to banking with a youth account. Your teens can move their allowance savings from your home banking system to a financial institution, and learn basic lessons about making deposits and earning interest.
If your teen is now 18 years old, financial institutions often have options for student or young adult checking accounts, which can provide more favorable terms than a standard checking account. Be sure to research all of your options with your teen to find the account that will work best.
Provide guidance as your teen sets savings goals. Will your teen be working to save for college, a down payment on a car, a computer or any other major expense? To help your teenage son or daughter reach a savings goal, you can ask your teen to write down a list of goals, prioritize them and choose which goals deserve the most funding.
This can be a good time to talk about weighing needs and wants in order to make smart financial decisions. You also can help your teen research the amounts that should be saved to fulfill that goal. As you provide advice and support, remember that it’s important to leave those final decisions up to them. They will be more motivated to work hard and save for goals that they set for themselves.
Help your teen track expenses. What’s your method for tracking expenses? Do you have financial software, use spreadsheets, or use a check register? Now is a good time to introduce your system to your teen, so that he or she is ready to manage earnings as soon as they come in.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 19 years experience in retail banking and with financial institutions in Guam and Hawaii. You can email him at email@example.com.