Now That Your Teenager Has A Part Time Job

So, your teenager has a part time job, wonderful. Now of course, that paycheck will be burning a hole in his/her pocket. That’s where you step in. As a parent, you have a real opportunity to help your teen learn to manage that money. What a great learning experience it will be.

First, sit down with your child and explain the reality of gross vs. net so that they will understand that taxes will be held from every paycheck. Better to do that before their first paycheck so that they don’t go into shock when they see those taxes withheld. Explain why those taxes are taken out, as well as the difference between income taxes and FICA taxes.

Take your child to the bank to open an account. Find a bank that has free checking and savings accounts so that it won’t cost them some of their hard earned wages in bank fees. You will also need to be a signer on the account since your child is a minor. Be sure to teach them the responsibility of owning a debit card and how it works. Be sure that they understand the fees involved if they take cash from an ATM machine that is not in their banks network. Make sure that they understand the importance of NOT overdrawing their account. Those fees can sure add up fast. They may not want to, but should keep a checkbook register. This way, they can keep track of all of their debits and credits and balance that checkbook every month when the statement arrives. This is a very important part of the responsibility of having a checking account.

One way to entice your child to deposit money in their savings account would be to have a portion of their paycheck transferred automatically to savings and you match a portion of it. Kind of like a 401K. It can be exciting for them as they watch their dollars grow.