It’s that time of year when our kids start thinking about getting a summer job. No doubt they are looking forward to some time with their friends at the beach or pool with a pocketful of cash to spend. Sounds like a great way to spend the summer – actually it probably is.
A kid’s first job can be the ideal time to start teaching them about money management and valuing the money they earn. I am sure most would agree that when you are earning money you tend to respect it more than when it is given to us, well most of the time anyway.
So I have put together a few tips parents can use to help build kids respect of their new found wealth and not blow the whole lot every week on cheeseburgers and downloads.
1. Set a budget – This is hard enough for most adults, let alone a teenager! However a very simple budget will make your child understand that they cannot spend more than they earn. This can be one of life’s best and hardest lessons to learn, so if they understand this early it will help them in later years.
2. No cash advances – This may sound harsh but if we are constantly handing out money on the proviso that our kids will pay it back once they get paid we are effectively being our children’s credit card. And anyway, I can’t recall when my son actually did pay me back.
3. Savings – Make sure a percentage of your child’s pay goes into a savings account which they cannot easily access. This can be used for a large purchase such as a vehicle down the track. This will get them in the habit of saving for something, or at least the bulk of it, rather than using credit all of the time. Make sure you celebrate milestones along the way son they can see their nest egg growing.
4. Review their bank statements with them – These days most purchases are made by way of eftpos out of a bank account, even for kids own accounts. The danger of this is that it does not feel like spending real money. I remember a conversation I had with my son earlier this year when his bank account dried up. “Where did the money go?” he asked. When he looked at the statement he saw all the small purchases he made on his card added up to emptying his account. Not a nice lesson but a good one to have early on.
5. Make it Fun – Saving and spending your money wisely is not all doom and gloom. There can some fun things coming out of a good money plan for kids. Think of the smile on their face when at the end of summer they have saved enough money for the new bike/xbox/surfboard all on their own. What a great achievement it will be.
These are just a few ways you can help your kids get into a good money management system for themselves. Actually some of these tips could be good for all of us. Enjoy the start of the sunshine.