The first paycheck has arrived. Hopefully you’ve already taught your teen all about saving, checking, and spending, but if you weren’t quite prepared, here are some tips for parents of teens.
First Bank Account
If your teen does not already have an account at the bank, now is the time to get one. The best way to teach a teen about money management is by opening a checking account for him or her. So, take a trip to the bank with your teen to fill out the paperwork, sit down and talk to a customer service representative, and help take responsibility for the teen’s first checking account. Your name will be listed jointly on the account, and you’ll be able to review checking account bank statements monthly along with your teen.
Piggy Bank Savings
If your teen already has a savings account opened from money received as a child, you can continue to use this account for the teen’s newly-earned savings. Or, simply open a new savings account attached to the new checking account. If the teen’s checks will be direct deposited, you can have a certain amount deposited automatically into the savings account. Or, if he or she receives paper checks, you should encourage the deposit of a certain set amount each pay period.
Let Them Spend, Too
Don’t force your teen into saving his or her entire paycheck. Decide together a reasonable amount he or she will be free to spend. Allowing teens to buy their own music, makeup, computer games, or clothing items is an excellent way to teach them about spending.
Parental Spending Habits
A survey by the USAA (United States Automobile Association Survey: "High School Confidential: An Inside Look at Teens and Money,” 2006) reports that teens learn to spend by following their parents’ spending habits. Practice what you preach!
“While it's tempting for parents to share advice, nothing beats practical experience,” says Lawrence Kutner, Ph.D., a nationally known psychologist on the faculty of Harvard Medical School, and the father of a 16-year-old boy.
"It's always more effective to teach by example than by lecturing," says Dr. Kutner. "We have to look at our own behaviors, and decide if they reflect things we want to teach our kids. What kids really need at this age is a chance to practice and build their financial knowledge and skills in ways that are relevant to a teenager." (United States Automobile Association Survey: "High School Confidential: An Inside Look at Teens and Money,” 2006)
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