How an after School Job Helps your Teen Learn Money Management

Kristen clicked on the login button after typing her user name and password. For the last several months, she had saved a majority of the money that she made working part time at the local library. She needed a more reliable car, especially because winters were so harsh here in Wisconsin.

Thanks to a high speed Internet connection, the screen changed in under half a second and displayed her bank account balance. She let out an exclamation of delight as the bold number in the lower right hand corner was just large enough to pay for a car with a functional heater, one that she had found through a friend.

Learning how to delay gratification by saving for an expensive necessity is just one way that an after school job helps teens learn about money management. Below lists several other lessons that teens can learn including: how much work it takes to earn a dollar, knowledge about savings, taxes and debt, and learning how to learn from money mistakes when the stakes are small.

Gaining a Practical Appreciation for Delayed Gratification

As the story above demonstrates, a teen can finally purchase large ticket items with money earned through their own efforts when they have a part time job. They can experience a little sacrifice each paycheck; reading quietly at home or playing a board game with a sibling rather than having fun at expensive dinners and dancing with friends.

When the big day comes however, driving off in their new (used, but new to them) car that they just purchased for example, the pride of ownership washes away those many lonely Friday nights of sadness.

Realizing that Dollars Don’t Grow on Trees

Teens tend to have narcissistic tendencies, thinking that the world revolves around their wants and pleasures. When money is handed to them for no effort on their part, these tendencies can be exaggerated, and they can be especially foolish in financial decisions.

When a dollar is earned through the sweat of one’s brow, the meaning of such a dollar becomes crystal clear. Borrowing between friends provides a clear and common example. A friend who is used to borrowing freely may find that the newly responsible friend stops the free lunch, for now every dollar has been gained through tough industry.

Budgeting for Uncle Sam, Education and Old Age

Every first pay stub brings some unpleasant surprises. As teens do not typically think of death, they do not respect taxes either, until their first after school job! Yet we all must lose our innocence at some time, and the bitter news about paying the government a small (large) portion of one’s income can be softened through an increased realization of other budgetary matters.

A teen can use his pay stub to start a budget, perhaps for the first time in her life. She can, and should, allocate a percentage of money to savings, charity, spending and helping out mom and dad. Sometimes it is even possible to start saving in a company sponsored retirement account while in a part time position. If this option is available, the teen should consider it, as the compound interest building for fifty years will be significant.

Having a Chance to Make Small Mistakes

Everyone makes mistakes, and teens are certainly no exception to this rule. When a teen has a first job, the spinner rims he just bought for $700 to put on his green Daewoo is probably a misjudgment.

Nevertheless, Timmy has made a mistake of only $700, not $500,000 as many adults make when they buy too much house for example. The teen can still feel quite raw about his mistake, because he soon realizes that it took over a month of stacking potatoes for the spinning silver rims that are no longer cool. One should console him over a milkshake, and then everyone can have a good laugh five years later.