A column on personal finance prepared by the Virginia Society of Certified Public Accountants


(June 18, 2003) – Summer jobs give teens new found freedom and money to spend. Just how well your teen handles his or her first paycheck may set a precedent for life. Here’s some advice from the Virginia Society of CPAs that may help your teen make the most of his or her summer salary and develop a solid basis for future financial success.

Set a Good Example

Parents should provide a good example of financial responsibility and involve their children in money management activities. It’s important that teenagers see their parents live within their means and practice sound money management – budgeting, setting long-term financial goals, making wise purchases, saving and investing. Start by reviewing the family budget and making your teen aware of monthly bills. Demonstrate how saving helps you buy the things your family needs, rather than charging. Also, explain your investment plans and strategy.

Teach them to Save and Spend Wisely

Once your teenager gets a steady paycheck, demonstrate how to save and spend. In other words, help them develop a budget. Establish three categories: essential purchases, savings, and discretionary items. Discuss and agree upon the essential items you expect your teenager’s paycheck to cover. This may include car insurance, gas, telephone bills, or school lunches. After establishing essential expenditures, set a savings goal with your teen, but be sure money is left over for fun. Your teen will be quickly disillusioned with working if there’s no money to play with.

Make Saving a Priority

Planning for future purchases is an important learning experience. For successful savings, encourage your teen to define his or her financial goal, and develop a plan for saving toward that goal.

By high school, every teenager should have a bank account. A savings account is best for younger teens, but older teens should know how to use a checking account. Teach your teen how to write and record checks and how to balance statements.

Teach Savvy Shopping Skills

Encourage your teen to comparison shop by checking prices with different retailers. Show them how to save money by buying generic brands or shopping at thrift shops. Make sure they grasp the concept of unit pricing so they better understand what they are getting for their money.

If you believe your child is spending too much money on frivolous things, have him or her create an expense log showing exactly where the money is going. Your teen may not even realize how much money is being spent on snacks, entertainment, and other activities. This can help put spending habits into perspective and inspire your teen to change his or her ways.

Explain the Real Cost of Credit

Your teen must start learning about credit before arriving at college and finding a mailbox filled with credit card offers. He or she needs to know how credit cards work and understand that late or unpaid credit card bills can affect the ability to buy a house or car in the future.

Most importantly, educate your child about the hidden costs of using credit. Explain that if a purchase is made for more than what can be paid back in one month, they will be subject to interest charges that add to the cost of their original purchase.

Some CPAs and other financial experts suggest that you give your teen the experience of carrying and using plastic with an authorized user’s card on your credit account. Your child gets a card with his or her name on it, but pays you for any purchases made during the month. If your teen doesn’t pay you on time and in full, you should charge interest on the overdue balance.

Talk Taxes

Teenagers probably get their first introduction into the world of taxes when they discover their paycheck was less than expected, thanks to income tax deductions. CPAs say it’s important to be sure your child understands the responsibilities for paying taxes and, if required, filing tax returns.

Finally, CPAs say it is wise to keep track of your teen’s earnings so that you have an understanding of how your child is spending that money.

The Virginia Society of CPAs is the leading professional association dedicated to enhancing the success of all CPAs and their profession by communicating information and vision, promoting professionalism, and advocating members’ interests. Founded in 1909, the Society has nearly 8,000 members who work in public accounting, industry, government and education. This Money Management column and other financial news articles can be found in the Press Room on the VSCPA Web site at

Lifetime Financial Planning, LLC

2325 Dulles Corner Boulevard, Suite 500, Herndon, Virginia, 20171

208 South King Street, Suite 201, Leesburg, Virginia, 20175

Phone: (703) 779-0515 - Fax: (703) 779-7815 - E-mail:

Hourly Fee Only | Financial Planning | Investment Advice | College Savings Plans |
College Financial Aid | Tax Planning & Prep | Planner Profile | Media - LFP in the News | Links to Financial Info | Questionnaire | Contact Us | Home |

©2001-2003 Lifetime Financial Planning, LLC All Rights Reserved