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OMG! GOT MY 1ST PYCHK! #GONNASPENDIT
It’s a rite of passage…your teenager got his or her first paycheck. It’s an exciting time for both of you. You are proud of your child for taking responsibility by getting an actual job (bye-bye allowance, hello W-2) and starting to learn how to live independently (just a few more years before they get a driver’s license, yikes!).
Of course, your child will quickly discover that about a third of what they earn is taken out by the IRS (What the heck is FICA?!) and that it’s getting harder to stretch a dollar. So now would be a good time to have “the talk” with your teen about money management.
But wait, don’t they teach financial literacy in high school? The short answer: sometimes. According to the Council for Economic Education’s 2014 Survey of the States, only 17 U.S. states require high school graduates to take a class on personal finance (Pennsylvania is not one of them). Further, according to a recent survey by H&R Block and its Dollars & Sense financial literacy program, 75% of teenagers say their parents are their most important source of financial information.
Thankfully, there are lots of resources to help you (yes, there’s an app for that). For example, the American Institute of CPAs has a great online resource for people in all life stages (www.360financialliteracy.org). You don’t need to offer your teen a crash course in compound interest. Instead, start small. Talk openly about how your family earns, saves, and spends money. Explain why putting 10% of their pay aside can reap big benefits over time… like a piggy bank, but bigger.
If you’re worried that your teen won’t take “the talk” seriously, take heart. The H&R Block survey also found that 62% of teens thought of their parents as good role models for money management, and only 4% saw their parents as poor examples of how to handle money.
Provident bankers are always available to help. Bring your teen into a local branch to talk with one of our experts about the value of saving (perhaps they could open up a savings account with us) and the importance of developing and following a budget. Keep the lines of communication open and you will find that your son or daughter can grow up to be quite the money manager.