Many teens will soon be earning their own money for the first time as they take on summer jobs. So how can you help your child manage and maybe even grow that money? Joining us with some tips, we have Matt Atkinsons from Coast Capital.
How can teens start earning money?
The sooner your teen can start earning their own income, the sooner they start to learn the value of a dollar. Encourage your teen to apply for a part time job whether that’s a paper route, or a part time job at your local restaurant, or even assigning household tasks so they can start earning an allowance on a weekly or monthly basis–those are really great places to start. Once they’ve landed that first job, the next challenge really is to keep it. We recommend talking to your teen about, “how do I want to show up to work everyday?” Being professional and really maintaining that positive attitude while they’re working. If a young person develops that strong work ethic, they’re likely to do that with their own finances.
Once paycheques start coming in–then what?
This step is the biggest one–and that’s regardless of age–and that’s developing a budget. How much are they earning? How much are they spending? What do they need to save for for the future? Inspiring your kids to save for their goals is really a great way to demonstrate how putting a little money aside now can really go a long way in the future. Learning the basics of savings will help them as they grow and really help them start putting money aside for those bigger, future purchases like tuition for university or the down payment of a home. But start small, and start early. Maybe it starts with a new pair of shoes or a nice pair of jeans, and as they get a little bit older it could be an iPhone or a tablet or a device, and then eventually they get to those large purchases like tuition or a vehicle. But to start, we always recommend putting aside about 10% of your paycheque towards those long-term savings plans.
Are there any apps or tools that can help teens manage their money?
It’s hard to find ways to get our teens to engage with financial literacy, and let’s be honest it can be a bit of a dry topic, and it’s also quite lacking in our formal education system. There are lots of great apps that are easy and intuitive and can really help your teen’s budget, and most importantly stay on budget. You have to find one that works for you and your family. I recommend a few like Left to Spend, Allowance is also a good one, or Smarty Pig to name a few.
When’s the best time to talk to teens about growing their money?
I really cannot stress enough, and highly recommend, start teaching financial concepts early. The earlier the better, and really start with the basics like interest. The good, the bad, the ugly, and really demonstrate how those things work. I always encourage parents to not shy away from showing your children your current financial situation. Take a look at your mortgage statements, your credit card statements, your investment statements, and really dig in so that they understand these items work so that when they take these situations on themselves, they’re better prepared to deal and manage their investments and their debts. Start with teaching the basics of risks vs rewards, profits and losses, and like I said–use those statements to show those examples.