Money Fix: Setting family policy for working teens
If you're lucky, the teenagers in your house will get summer jobs or permanent part-time positions. But a paycheck poses a challenge: How can you make this a teachable moment?
Some parents ask teens to contribute, at least for social events and clothes; others are just content they are earning and learning responsibility, according to the Clark University Poll of Parents of Emerging Adults. "Decide what your family policy will be and talk to your teen," says Jeff Arnett, director of the Clark University Poll in Atlanta.
Set expectations: "They should learn to budget, and it should be enforced. If they spend all their money, mom and dad shouldn't be the ATM," says Elle Kaplan, CEO of LexION Capital Management in Manhattan.
Make a plan: Melville financial attorney Leslie Tayne is the mother of three teenagers. "We lay out what they plan to use their money for ahead of time, whether it be spending money, saving for special purchases or simply saving. Determine from the outset how and where that money will be allocated."
Get specific: "I like the 80/10/10 rule, of spending 80 percent of what you earn, saving 10 percent and giving away 10 percent. Embedding this formula early will spare them hardships later," says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling in Washington, D.C.
Let them make mistakes: Says Avani Ramnani, a certified financial planner with Francis Financial in Manhattan, "They will make mistakes. It's OK, that's how they'll learn. Better now than later."