Both my daughters wanted to work as soon as they could by getting a summer job. I did not have to push them – they wanted the experience and the money. I suspect it was also about independence. To get her first job, Allison created a resume-without my help or knowledge – and walked around the town dropping it off hoping to get a call back for a summer job.
My daughter Allison’s first job was at a shoe store. She quickly realized that it was hard to make money at $1 a pair of shoes sold on commission(!). She then moved on to waiting tables at a local restaurant. At the start of this summer job, we talked about how much she would save. She was not inclined to save, so I let things ride until after the summer was over.
Do the math
Just before she was to go back to college, I invited her out to lunch to talk about how much money she made over the summer. We talked about what was left to head back to college with to cover her “expenses” that we did not cover. Just for fun – mine alone, mind you – I did the math for her. I showed her how much money she had made – and what was left.
Seeing how much she earned and spent that first summer was a real eye-opener for her. There’s nothing like experiencing real consequences to help you make better decisions in the future.
Pay yourself first
From that point on with other summer jobs, Allison was a “Pay Yourself First” gal. She began saving a portion of every paycheck. She understood that putting some money away with each paycheck meant more money to go back to college with to cover her lifestyle choices.
After college, as her jobs became full-time, she was first in line for handing in her 401(k) paperwork and making sure she got her match. Now married, she is heading into a housing market that looks daunting. She questions whether all her long-term savings was the right choice – as she now struggles to put together a down payment for a home.
Hard to explain to her what I now know at 65 – that the money saved now will indeed bring her security that can only be gotten by sacrifices today that will grow and compound over time.
Help them plan for the money earned
Both girls have a deep appreciation for 401(k) plans and each have a ROTH. We helped get them started by walking them through the paperwork which seemed to be the most intimidating part for them. We did not want that to stop them from saving so we offered our help. It was their money they saved but our experience and advice that helped them create the plan for that earned income.
This summer, encourage your kids to get out there and work. Lemonade stands work for the younger kids who do not meet the minimum age requirement. Help them make a plan by sitting down with each paycheck and suggesting a portion be set aside for saving. For older kids starting jobs after college, ask about their job benefits. See if they have looked at their savings opportunities and hound them until they do!
The key here is – no matter what age -to always have the discussion about what they plan to do with the money once it is earned. Making a plan and executing the plan builds a savings muscle that over time will support their future.