Summer break is here for most teenagers, which is often a time when they enter the workforce for the first time. Although having cash of their own is an exciting time for any team, it can lead to frivolous spending habits. Earlier today CNN Money posted a helpful article on how parents can help their teens manage that first paycheck. If you are a parent of a teen with their first job then I highly recommend checking it out.
Have the tax talk
Better explain the harsh realities of gross vs. net before your teen gets any big ideas about what she'll spend her wages on. She may not yet understand that taxes will be withheld from every paycheck. So sit down with your child to go over that first pay stub, explaining how and why taxes are taken out, as well as the difference between income taxes (which most teens are likely to get back when they file tax returns) and FICA taxes (which they won't). "This will be a real shock to them," says Adam.
Take it to the bank
Help your kid open two bank accounts -- one savings, one checking. Spend time together comparing fees and rates online, looking specifically for a no-fee checking account meant for teenagers. You'll have to co-sign the accounts, but it's worth it so your kid can start learning to use an ATM card and keep his balance in the black. (Just don't forget to mention the exorbitant costs of using another bank's ATM.)
