Your kids' first summer job can be an effective tool to teach them how to manage their money.
With your teen's first summer job comes a rush of pride for being able to take the first step toward financial freedom. Finally, they won't be begging you for money every time they want to hang out with their friends or whenever they want to buy a new video game! Needless to say, this can be an extremely exciting time for your kids. In addition, this can also be the perfect time for you to teach them some valuable money lessons that can serve as the foundation for their future financial success.
Some Valuable Money Lessons Your Kids Need to Know
The importance of saving money. Teach your kids to put something aside when the paychecks start coming in, especially since they don't yet know the importance of an emergency fund. Ask them to put at least 10% of their paycheck into a general savings account and another 10% into their college fund. Do this and you can be sure that they are off to a good start.
Prioritize needs over wants. While you shouldn't expect your kids to take care of all their bills this early, teach them to start chipping in for small items such as gas. Teach them to distinguish the difference between needs and wants and make them understand that financial freedom comes with a certain amount of responsibility.
Teach them how to manage their money. In relation to the first two points mentioned earlier, you should teach your kids how to manage their money so that they won't get into the habit of spending more than what they earn. Between peer pressure and the relentless advertising aimed at our youth, your kids don't stand a chance of managing their money wisely unless you teach them how.
People are rewarded for their hard work. Make them understand that there is more to working than just showing up for their shifts. Teach them that hard work and a solid work ethic may eventually translate to a pay raise or an invitation to come back next summer so they need to take pride in their work, no matter how menial it may be, and give it their best shot.
Tax issues. A lot of kids are surprised when they receive their first paycheck since they don't expect that the IRS will take a slice out of their earnings. Use this to teach your kids about the things that their taxes pay for.
Getting hired for a summer job and earning their first paycheck can be an exciting time for any teen but you can also use this opportunity to teach them some valuable money lessons that can help set them up for future financial success.