Yay, Your Teen Got a Summer Job! 5 Steps to Make Sure They Don’t Squander Their Cash

Before they even start their first summer job, teach your kids money management skills, says Emily Lassiter, cofounder of The Wealth Edit and mom of two teenage girls. “[It’s] one of the biggest gifts you can give your child…Bad money habits lead to stress. Good money habits [can] lead to confidence, opportunities and wealth. Money saved from an early age is by far the most impactful.”

Thanks to Venmo, Cash App and credit cards, teenagers might find the value of a dollar more vague because, instead of seeing cash in their hands, it’s digital and intangible. “I’ve quickly realized that one of the biggest hurdles teenagers face these days is that they’re not seeing cash leave their pockets. The money is passed around electronically without a thought,” Lassiter says. “As a result, I’ve had to get creative and come up with new ways to bring this point home.” The most effective way Lassiter has found to do this? Setting the expectation that they need to earn their spending money. “One daughter loves to babysit, another likes to do extra work around the house,” she says. “Whatever it is, make them earn the money.”

Lassiter set both of her teenage girls up with a checking account and a debit card. “At the end of the month, we review their statements and they’re almost always shocked by how much they spent,” she says. Make sure you have access to their bank account, Venmo, PayPal, Apple Pay and so on, Lassiter says, and help your teenager clearly see the patterns in their spending. Sit down and make a list of common categories (clothing, food, gas, entertainment, savings) then help them determine where they need to cut back and where they have a bit more wiggle room. “This is the perfect place to give them grace with mistakes,” Lassiter says. “Every mistake is a learning opportunity and you want as many of those as possible now, when the stakes are still low.”

“Teens do well with clear boundaries,” Lassiter says. To make saving money fun, she suggests letting your teenager get involved in where their savings will go. “This is an amazing teaching opportunity,” she says. “Is there something they want to save towards, like a new car? Do they want the money to go into a savings account where it’ll sit, or do they want to consider putting the money in an investment account where it will grow over time?” One such tool: a Fidelity Youth investment account that can be opened with no minimum balance (and a free $50 just for signing up).

Lassiter suggests discussing expectations for how long your teenager’s earnings should tide them over. “I made it clear to my teenage daughter that her money saved would be used for any expenses she had that were above and beyond her normal allowance throughout the year,” she says. “If they know they need to make this money last, they’re much less likely to blow it all in one place.”

Moral of the (money) story? Keep the lines of communication open and you’ll help set your teens up for savings success—now and long into the future.