Habitual Savings: When Teens Get Their First Jobs

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When your child is ready to find their first job in the workforce, will you be ready to accept the long-term responsibility to require them to develop dollar discipline and life-long savings habits early in life that will take them where they want to go?

Many youth exchange their babysitting and lawn mowing jobs for part time positions in the workforce as they enter high school or get driver licenses. Some begin as early as 14 with a parent's signed permission. How will they get to work and home? Who will pay for the gas? Whose time will be interrupted, if gladly? Will there be uniforms or special shoes required at their expense, perhaps a business wardrobe? Will they be eating out while at work?

There are two huge lessons you can teach your child when they are at the point of applying and interviewing for jobs. The first is how to get the big picture of how much it costs them to work and understand who is going to foot that bill. The second is requiring them to begin a saving habit. You can set your own parameters, but here's what worked for me.

After explaining the hidden costs of being employed, mother gave me a choice of contributing to the household budget an amount equal to her estimated costs for my employment and transportation, or depositing exactly half of my net pay into a savings account that I would not be allowed to touch until high school graduation except in case of emergency. There was nothing my parents could not provide for me at that age, so it was pretty much a no-touch policy.

At nearly 14 years of age, I opened a savings account at the bank in the mall where I worked. Each pay period, I deposited half except for the additional penny when it was an odd amount. As agreed, I showed her the deposit receipt and she taught me to keep accurate records of my deposits and interest.

Did we both stick to the no withdrawal rule? Strangely, I rarely was tempted to purchase some un-necessity with my savings. Mom was right about several things. After a few paydays, I didn't even miss the deposited amounts. In fact, I began dreaming about what I could do with my savings.

We made one exception. About six months in, I had an opportunity to go on a work-study tour the following summer with the foreign language club at school. My parents could ill-afford such an expense and my hopes were dashed--until I remembered my savings. No, mom said. Once a person makes a withdrawal, it becomes so easy to continue making them. Thinking one more won't hurt or they will put it back next payday, they begin to drain their account little by little until their habit is gone.

This one time though, mother felt it was not an emergency, but in our family, it was considered a once-in-a-lifetime opportunity to travel outside the country. We reached a compromise where I used half my savings and they matched it so I could go with my classmates to Mexico for two weeks. It was a fabulous experience I never will forget.

Mother was right about another principle. After that, I pined to withdraw funds for things I now am glad I did not waste my hard-earned money. It was harder to part with the half I deposited each payday.

Those lessons and mother's commitment to uphold her end of the bargain were the beginning of the best money management lessons, dollar discipline, and learning to wait for something important I ever learned.

Years later when applying to purchase my first home, the loan officer was impressed that we habitually set aside in savings what amounted to 16 percent of our gross pay compared to the then-average of less than five percent most couples were saving regularly.

I hope this helps you prepare your child and yourself to travel a responsible path of wise money management and saving habits so important to begin early. If you are not in the habit of saving regularly, this could be an important opportunity to get on a right track with your money too.
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