The beginning of summer brings with it the first job for many teenagers. Most teens go into the work world ill-prepared to manage the money they will be making. Even if their parents have attempted to teach them about money, they still haven’t had the wonderfully frightening experience we have all had. You know the one - it’s called “getting to the end of the money before the end of the month.”

   Here are some tips on teaching teens about managing the money they are about to make :

   Once they get a job, here’s what to do. Have them take the very first pay check and........  blow it. You might have been expecting me to say save it, buy a savings bond or something else responsible. Here’s why I suggest having them spend it - they get to experience the benefits of hard work and have some fun.

    After the first paycheck, here’s how to handle every other paycheck,  for the rest of their lives. I call this the 10 by 4 solution. With each and every paycheck, take 10% and put it in four different places.

First 10% - Pay yourself first. Put this first ten per cent in some form of savings that you do not touch until you retire. Begin this when you are young, and it’s amazing what can happen. If a person started at age 21, and put just $1,000 a year into some kind a savings that will gain you at least a 10-12% return a year (this is very doable, by the way), and did this for only eight years until age 29, and then did not touch it until age 65, you would have almost  half a million dollars. Pay yourself first.

Second 10% - Give it away. If you are a person of faith, you’ve probably been taught to tithe. Whether it’s tithing, or simply giving to a favorite charity, giving away ten per cent teaches your brain an interesting thing - if I can give this away, there must be more than enough to go around. A nice way to  feel.

Third 10% - Put this ten per cent toward  getting rid of any debt that may have accumulated. Money you owe your parents or some outstanding bills.

Fourth 10% - Save it up for something you really want. For many kids that’s a car. Or maybe a trip, a stereo, or some nice clothes.

   In this way, you are teaching your teen, from day one, how to live on 60% of their income. Instead of the 110% that most of us live on.

   Because most teens have not had the experience of getting to the end of the money before the end of the month, the words “I can’t afford it” have little or no meaning.

  Here’s what can happen in lots of homes -

“Mom, can I get a new (fill in the blank)?”

“No honey, I’m sorry, we can’t afford it.”

“But mo-om, everybody else has one!”

“No we can’t afford it.”

“But mo-om, (lots of words involving hassling and bugging).”

“We can’t afford it!”

Repeat this process a few times and here’s what you get -

“Alright, you can have it, just this once. But don’t ask for anything else!”

  Yeah, right.

  What the kid learns is that what “we can’t afford it” really means I just haven’t bugged and hassled enough!

  Here’s a very concrete way to teach kids about money, where it all goes, and what “we can’t afford  it” really means. This one can work for kids middle school age and above.

   Parent’s, take your next paycheck, take it to the bank, and have it cashed in all one dollar bills. (The bank tellers are going to just love me!) Bring it home and call a family meeting. On the kitchen table, make a pile for all the ones. Then separate all the bills into their own separate pile. For each bill, (house payment, car payment, braces, health insurance, electric bill, etc.) count out the one dollar bills and place them in the appropriate pile.

   In this way, kids get to see a very clear visual picture of where the money goes. It gives them a context for understanding “we can’t afford that right now.”

   All of these suggestions and techniques serve to teach teens about the successful management of money in their lives. Come to think of it, these suggestions could be useful for grown-ups as well............