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Banks strive to help teens save
summer jobs money
By Lucy
Lazarony • Bankrate.com
PHILADELPHIA
-- Today's hard-working teens know how to make money and they know
how to spend it -- fast.
Teens earned more than $100 billion
in 1997 with summer and part-time jobs and they spent almost all
of it.
"They know they have spender's
disease," said Steven Sanders, president of a money management firm
in Philadelphia and a spokesman for Citibank's Money Matters for
Young Adults program. "They say, 'I spend everything I earn,' and,
'Money burns a whole in my pocket.' They know what it is and they
know it's a bad thing."
Budget
is an ugly word
Sanders travels the country for Citibank teaching big-spending teens
the basics of money management. He refuses to use the word "budget"
because it sounds too restrictive. Instead, he teaches teens how
to develop a spending plan and determine how they're going to spend
90 percent of what they earn.
He asks teens to make a list of all the things
they want and to put a price tag on it.
"They treat their own hard earned money differently
than the money they get from mom and dad," Sanders said. "So immediately
some financial discipline sets in when they do this exercise."
He also teaches teens the difference between
gross and net income. Otherwise their first paycheck, chocked full
with deductions, can be a bummer.
"They want to know who Mr. FICA is," Sanders
said.
Save
a little, spend a little
Another tip for teenage big spenders: Save some of every paycheck
and put it into a rainy day fund or invest it. He encourage teens
to get acquainted with the stock market by creating a "phantom portfolio"
and following their investment picks in the newspaper or online.
"Young people learn economics really well. They understand supply
and demand," Sanders said. "They're more attuned to the concepts
than they're given credit for."
Kids
are growing up fast
And they're more concerned about their financial futures than most
people realize. One third of the high school students polled in
a national survey by Louis Harris and Associates for Girls Inc.
said they were "uncertain" or "worried" about their financial futures.
And 78 percent of the students said they were worried about how
they were going to pay for their education after high school.
"Young people aren't
enjoying their childhoods as long. They are aware of the cost of
things," said Arva Rice, program director of the economic literacy
initiative for Girls Inc. "Young people are concerned about the
future. They want to be prepared."
Sanders agreed.
"They want to know more. They want to know how they can avoid the
financial troubles that their parents, grandparents and even older
siblings have suffered."
Free personal finance
brochures targeted to teens like "Beach Blanket Budget: How to Manage
Your Summer Salary," "Money Matters for Young Adults" and "Tax Facts
for First-Time Filers" are available from Citibank by calling 1-800-669-2635.
Financial tips
for parents and young adults also are available on the Girls
Inc. Web site.
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Do the math
Begin by figuring "take-home pay" for the
entire summer. Make sure your teen is aware of how deductions
will affect actual income. teenagers should realize what their
net income for the summer will be so they can develop a realistic
budget. |
Plan for the future
Discuss a savings objective to reach by
the end of summer. The first component of a budget plan is savings.
If your teen can identify a savings objective -- to have $500
by summer's end or enough money to pay for a football uniform
or to save $1,000 toward college -- it's much easier to find
ways to save. It also builds self-confidence and belief in money
management if a financial goal is reached. Encourage your teen
to "pay yourself first" by putting aside a portion of every
paycheck in an interest-bearing savings account. |
Plan for the present
Sit down and develop a spending plan. Encourage
your teen to create a spending plan once their summer income,
minus savings, is determined. It's important to emphasize that
a spending plan should be flexible and can be revised as goals
change |
Sort things out
Help your teen identify "needs" and "wants."
An important step in every spending plan is to identify "needs"
(transportation to work, school supplies etc.) and "wants" (the
latest footwear, an expensive gift for a friend). The "needs"
comprise your child's unavoidable expenses, while the "wants"
should be treated as rewards for taking on the responsibility
of a summer job. |
Practice for bigger things
Make the financial world accessible. Young
adults should familiarize themselves with the financial sections
of their local newspapers as a start. Encourage them to create
an imaginary "stock portfolio" of companies that make products
they like. Track the results together. |
Remember Uncle Sam
Anyone over the age of 14 should be prepared
to deal with taxes. If a young adult earns more than $4,150,
has unearned income of $650, or if combined earned and unearned
income totals more than $650, then the law requires that he
or she file a tax return. The good news is that if annual earnings
are $4,150 or less (likely at that age) a refund may be coming.
Finally remind your teen that a refund is money that he or she
worked for, not a present from the government. Encourage them
to save a portion of it or to have it directly deposited into
a bank account. |
-- Updated: July 28, 1998
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