Summer jobs are in full swing now. That means teens will have cash flowing that they may not know how to manage well. Parents and guardians should take time to teach their teenagers how to set financial goals to make the most of their earnings this summer.
Setting Goals for Summer Job Earnings
Setting goals for summer job earnings is a great financial skill building activity. If this is your teen’s first or second job, they probably have never done any financial planning. While there may not be any significant bills, perhaps a car or college is in their future. There could also be a class trip overseas that they need to cover. Even if they just need some extra spending money, setting goals can help them make their money last longer.
To begin the conversation, go through these questions with your teenager:
- What do you want to accomplish with your money?
- How much will you need for your goals?
- Are these SMART goals?
- Specific, Measurable, Achievable, Realistic, Timely
Once you have an idea of their financial goals, you might need to steer them towards reality, and that’s okay! Financial planning isn’t an automatic skill. If they aren’t used to earning their own money, budgeting, and saving, they will need your guidance to give them a solid foundation.
Starting a Budget to Set Financial Goals
Now that you and your teen have set financial goals for their summer earnings, it’s time for a budget. The budget doesn’t have to be as complicated as the one for your household; the budget basically needs to track the money coming in and the money going out, including money for savings. If they have multiple savings goals, create a line in the budget for each one to measure progress.
Teenagers might deny the importance of a budget, citing multiple reasons why they don’t need one. However, without documenting spending on paper or tracking it online, it will be nearly impossible to successfully accomplish any financial goals. If you need help getting started, visit ACCC’s Budgeting section for templates and guidance.
A summer job is a great way to earn income and learn to set financial goals. Make the most of this teachable moment by setting aside time with your teen a few times a month to review their progress (as much as they will let you). Establishing positive and responsible financial habits now will help them for years to come. Don’t worry if they fall short of some of their goals. It’s the perfect opportunity to learn some hard lessons without being in serious financial trouble.