Help Your Teen Save Some of Their Summer Earnings
Summer is coming up fast which means many parents will see their teen taking seasonal employment. Summer is peak time for youth employment, as almost 61 percent of 16 – 24 year olds participate in the labor force in July.[1] Our America Saves for Young Workers program works with 30 youth employers across the country who employ over 140,000 youth. We’ve taken our messages and lessons-learned and translated them for parents who would like to be proactive in their teen’s employment this summer.
- Make sure your teen has a bank or credit union account.
Many teens don’t own an account of any sort aside from “the bank of mom and dad.” At America Saves, we believe that account ownership is a foundational component to financial stability. So you have two options: open a “joint account” with your teen, where you’re both owners; or, research (or get your teen to research!) local banks and credit unions to find out if any of them offer “noncustodial” accounts, where your teen will be the sole owner. You know your teen well, so one of these may be ideal.
- Encourage your teen to utilize direct deposit.
If your teen is deciding between two equal-paying jobs – one that offers direct deposit and one that doesn’t, encourage your teen to take the direct deposit job. It allows them to access their money more quickly and reliably, and it empowers them to skip the check cashing fees!
- Teach or help your teen to save automatically.
You may see “save automatically” across our resources here at America Saves – but we mean it! It’s so easy, and it’s so effective. Help your teen identify on their direct deposit form whether they have the option to split their pay. If so, encourage them to direct a portion of their pay directly to a savings account – and offer some thoughtful guidance. Many teens get so excited about saving they sometimes overcommit to saving. If they can only direct deposit to one account, teach them how to set up a limited time automatic transfer at their financial institution. They can set the transfers up to happen on each of their scheduled paydays.
- Repeat after us: savings are not for spending!
If your teen has two accounts and one is a savings account, then teach your teen NOT TO TOUCH THAT MONEY. Okay, don’t yell at your teen, but this goes back to setting reasonable savings goals. In the US, you can only make six transactions on a savings account a month. That means not only is it not ideal to over-save and then frequently transfer, but it’s not allowed. And that’s not such a bad thing. Because a savings account should always be psychologically designated as “for saving only.” That means the only time you tap into that account is 1) when you’ve reached your savings goal, or 2) you need the money for an unexpected emergency.
Finally, if your teen has employment through a large local employer of youth, feel free to reach out to the program about America Saves for Young Workers. It’s a free program that will deliver these messages directly to your teen through an all-online program and automated text and email communications.
By: Amelia O’Rourke-Owens
[1] Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, Summer youth labor force in July 2017 on the Internet at https://www.bls.gov/opub/ted/2017/summer-youth-labor-force-in-july-2017.htm (visited May 23, 2019).
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