Sweet! 16 or 17…now money is real!

moneyEvery kid can get a job when they are 16.  The definition of ‘job’ varies by your child’s responsibilities, abilities and work load.  For some kids, earning might only occur in the off season from their sport or activity.  For my daughter, it meant getting a job at the local ice cream (custard) place.

When your kid starts earning an actual paycheck, it is important to monitor their spending and make sure they are saving.  As a result of school and activity circumstances it was necessary for me to get my daughter her own car.  I made her fill out all of the grade paperwork and driving log that helped with the insurance premium discount and she pays about half of her insurance every month.  It is truly my opinion that kids have to have some financial ‘skin’ in the game so that they understand the value.  If yout circumstances don’t require a car there are plenty of other ways to teach your child to budget their earnings.

It is important that the money is kept separate from yours.  My daughter and I opened an account at the local credit union.  I liked that there were no fees at all and the savings account earned interest.  I was also able to watch her transactions from my account.  We made a deal that she had to text me in order to spend more than $5 so that she had to think before she spent.  Also, some banks and credit unions have a text or email features that will automatically send a message when a transaction is made, some are very customizable.  Spend the time to discuss that spending with your kid and make sure that they don’t overdo it.  I was OK with my daughter having a Visa Debit Card from her account, that is an individual decision and you really need to think about what having that plastic card means in your situation.  If you are not ready for your child to have a credit card that is linked to an actual account you can try a pre-paid card.  I would suggest doing research and comparing benefits and costs to see which would work best for your situation.  I found a great article here.

The main message to get to your teens is save, save, save and to have them think before they swipe.

Enjoy…Nancy Ann

Goal Setting for 14 – 15 Year Olds

first car

Believe it or not 14 – 15 year olds want to learn to drive.  Some of them have been dreaming of their first car since they were about 10!  Over the years, I have found that the car that kids want is not usually the one they usually are able to afford.  No only does a teenager have no idea about the cost of a car they usually do not think beyond gas, they completely gloss over oil changes, tires and insurance.

One good way to teach them about how things cost is to have them get a fake job and paycheck.  You can have them deposit their paycheck into their checking account and keep a check register to track spending.  I calculated a minimum wage job and then remembered about Uncle Sam.  Deposit 92% every two weeks and let your teen take withdrawals to pay for gas for trips to their friends houses and sports or clubs.

Some of your kids do not want to drive a car or live in an area where it wouldn’t be necessary to drive.  An alternate activity could be to play the market.  The stock market is a difficult concept to master…games should help.  Explore any one of the many kids investment sites or make it your own by choosing a few stocks and tracking them.

Either way, this transition from chips and small bills to a realistic way of handling money like an ‘adult’ is not easy…try to make it fun!

Enjoy…Nancy Ann