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Question: My teenager just got his first job. This will be the first time he has needed to really control his own finances. He has his own car with the expectation that he will cover his own gas. Now that he has a job, we've talked about him saving for any car repairs that may come up and registration as well. We want to slowly increase his financial responsibilities but also don't want him to feel like a job just means he saves for boring stuff. What's the best way to help him budget, save for things, and also save for the fun stuff?
Answer: Working teens gain great experience and develop important skills from part-time or summer jobs. It’s also a wonderful opportunity for some real-life, real-time financial learning!
Being open and honest about your expectations about his financial responsibilities is exactly the right place to start. By telling him from the get-go that he will be paying for his own gas, car repairs, and registration, you have eliminated any confusion as to what is expected of him.
If you haven’t done so already, create a budget and timeline based on his financial responsibilities. Give him some concrete numbers of the costs of things that will ultimately come up, and write it down so he has a record he can refer to.
Examples include:
- How much does it cost to fill up the car with gas?
- How often (on average) does he need to fill up per week?
- How much does registration cost and when will it need to be completed?
- When is the car due for an oil change (base this off the mileage from the last oil change) and what is the cost?
But don’t stop there! Go through an average day or week with him, how much (on average) does he spend on food, outings, purchases? Develop both a weekly and long-term budget with him. A clear picture of his spending habits will help him determine how much out of each paycheck needs to be saved and what can be spent.
If he doesn’t have a checking and savings account already, we recommend he opens both. He can have his paycheck direct deposited, with an amount determined by his long-term care needs put directly into savings, and weekly car needs like gas money as well as his “fun” spending put into his checking account. Keeping both separate will help deter the desire to dip into his savings account.
It’s also very important to go over the consequences of failing to uphold his responsibilities when it comes to paying for gas, etc. Does he lose car privileges and get driven to work until he can pay? Does he lose it for a week? Clarity of consequences will help set the stage for success and if he does fail, by all means, hold him accountable and stick to the plan!
Part of the fabric of Lewiston-Auburn since 1887, Auburn Savings provides financial products and services for individuals, families, businesses, and the shared community we call home. Visit us at auburnsavings.com
