Get off on the right foot by helping them fill out the W-4 form for their new summer jobs. Not only can these forms be confusing, figuring out how much to have withheld is a key step in money management. Talk over who will pay the income tax on the earnings from their summer jobs. Then, assuming you have already set up a checking and savings account for them, teach your teens to pay themselves first.
It’s highly important to make saving automatic. Set up direct deposit, so that their money goes directly to the bank and not through their hands. You can divide their paychecks over multiple accounts, which makes it possible for your teens to automatically put a portion of their earnings away in a savings account while keeping the rest in a checking account for spending money. Sit down with your children and discuss which portion of their paycheck they should save. Understanding and utilizing the best available money management options lays the foundation for responsible financial habits for years to come.
