Both of my girls could not wait to be old enough to get their first job and earn some real pocket money.
They both got jobs at Woolworths like so many other teens and with the excitement of earning their first pay packet came the need for them to learn how to be money savvy with their new found ‘wealth’.
Gone are the days of popping into your local branch to deposit money, it’s all about internet banking now and finding the right account that lets your teen have control over their spending and savings. If they start establishing good habits from an early stage, this will help them greatly in a couple of years time when they will be thinking about their first big life purchase, a car! Getting car finance is a much easier task if your teen can show a regular savings habit. This post is brought to you by IMB Bank.
TWO IMPORTANT STEPS TO TAKE BEFORE THEY START WORK
Before they put their uniform on for the first time and turn up for their first shift, there is two important tasks that must be completed.
1 – Tax File Number – Applying for a Tax File Number is free and easy. Your child’s school should have the necessary form that needs to be completed and sent in to the ATO. Your teen will need a Tax File Number for their employer so having this set up before they secure a job will make things easier for them to start quickly.
2 – Open a suitable bank account – It is time for your teen to have a bank account with card access so they can go shopping with their money instead of yours. Their wages will be paid by electronic transfer into this account, so again it is best to have this all up and running before they start work.
SAVING INTO A SUB-ACCOUNT
The sooner your teen starts saving even a just a small portion of their weekly wage, the quicker it will become a habit. They will discover the joys of earning interest (free money in their eyes). Big ticket items become a reality and they will be learning one of the most important financial lessons in life, save for the big things not depend on credit cards to get you what you want at a much higher price.
A sub-account is a second account attached to an everyday account. Logging into internet banking on their phone or computer will show both accounts and switching money from one to the other is quick and instant. Sub-accounts are interest bearing and it is the perfect place for your teen to watch their savings grow over time.
Both of my girls have become masters of switching money into their sub-accounts and will often transfer almost all of their pay into it. When they want to spend some of their earnings, they simply transfer money back into their everyday account. We do know a few people that have been the victims of card fraud, so by keeping most of their funds in their sub-account, if anyone should get hold of their card numbers, they wont get to have much fun because they keep so little in their everyday account.
TIME TO TRUST
Both of my girls love to shop, and I was concerned that as soon as they got their first pay packet, they would go and blow it all. I had to let go and let them make their own decisions. I had to trust their choices. Much to my surprise, both girls loved seeing their savings growing and even set themselves limits of how low their savings account could go and would only allow themselves to spend what was left over.
Miss WW had no trouble securing car finance when she bought her second car and decided to get a brand new one with 7 years warranty instead of an older car that would constantly need expensive repairs. It is great to see young people savvy about finance and making responsible life choices.
Are you a saver or a spender? What valuable money tips are you sharing with your teens?