Summer Savings: Teaching Your Teen How to Manage Money

Posted by Susan Epstein on April 20th, 2009 at 04:11pm

Daniel Rosenkrantz, Coach to Parents of Tweens and Teens

When I was fifteen years old I got my first summer job: I made salads at a local pizza place. I would go in at around 4, work until 10, and then take a pizza to go and eat it on the beach with a friend. This was pretty much how the summer went. I made about $2000 that summer, which eventually dwindled into nothing. This week’s blog is about ways that your teen can make money, spend money, and still have some savings.

Similarly to how Susan’s allowance plan works, the teen savings model also does. Susan recommends when giving allowance to your children to have four different envelopes: Savings, Something I am Saving For, Charity, and Spending Money. You would decide with your children how much goes into each envelope weekly. With the teen savings model, the numbers will be a bit bigger (with weekly pay checks), but the principle is the same.

If your teen doesn’t already have a bank account, help them set one up. Once you know the rough amount that they will be making each week at their job, sit down with them and design a budget that you both can agree on. Here is an example.

Billy is making $150/week at the local car wash:

Savings: $80 (directly into the bank)
Something I am Saving For: $15 (i.e. the amusement park trip coming up in a few weeks)
Spending Money: $30 (i.e. going out to eat etc.)
Other: $25 (could be gas for the car or some other regular expense)
Charity: I would recommend giving your child the option on this one.

Each budget line should make sense. Saving without reason doesn’t always register for teens and adults alike!

The money that goes directly into the bank every week should remain untouched until at least their 18th birthday. Think of this as a self-made trust fund.

Having a summer job can be a great way to learn responsibility, how to budget funds, and have a fun and rewarding summer all in one!