03 Feb Educate and Celebrate Your Teen’s First Paycheck
In a blink of an eye, your child has gone from taking their first steps to entering the workforce. All those hours have led up to a significant milestone—their first paycheck! It is an exciting time to support and celebrate their hard work. However, your teen may be surprised when the amount they were expecting does not match their pay stub. This moment is the perfect opportunity to teach your teen the first habit of building wealth: PAY ATTENTION.
Pay Attention to the Details
This all starts with evaluating their pay stub together. Why? Because it is easy to overlook the fine details in their finances, especially when utilizing an electronic transfer deposit. Study each aspect of their statement and help your child understand what their paycheck entails. You can take the opportunity to describe the differences between gross and net pay. In addition, educate your teen on what is going in and out, particularly regarding the nuances of withholdings. However, analyzing their paycheck is one of many matters to discuss.
As your teen transitions into adulthood, emphasize the importance of paying attention to the world around them. In particular, remind your child of the importance of voting and knowing where tax dollars are being spent. This also presents an excellent opportunity to ensure your teen understands how to register to vote and let them know their voice matters!
Investing this time and education into your teen upon receiving their first paycheck sets the foundation for their financial future. But don’t just take our word for it. Learn from Tommy’s experience receiving his first paycheck and the vital role his mother, Traci, had in helping him comprehend this first financial habit.
Tommy was elated to receive his first paycheck after completing his first two weeks at his new job. Bubbling with anticipation, he reveled in calculating how much all his hard work earned. However, his excitement quickly turned to confusion upon glancing at his pay stub. Deductions and withholdings resulted in a difference from his expectations. Where had all his money gone? It wasn’t until Traci explained what each withholding meant, particularly with Social Security, and how Tommy could utilize a budget to allocate his earnings to satisfy his needs and wants. After this discussion, Tommy is now equipped with the financial knowledge to better prepare and celebrate his future paychecks. Way to go, Tommy!
As you can see, celebrating and supporting your teen through this first paycheck is the opportunity to build their financial foundation. Arm them with this knowledge and help them begin these healthy habits that will bring about the right way to build wealth. After all, investing in their financial future always comes with positive returns.
Any opinions are those of Traci Meakem Richmond, JD, CDFA™, RICP® and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors.