Most 12-to-14-year-olds I know are pretty busy over summer break. They're active with sports, their friends and for many, their first odd jobs around the neighborhood - the first real spending money they've earned outside the home.
At that age, the money young teens earn in the summer usually comes from parents for household chores like mowing the lawn. Most parents never have a discussion with their kids about how to spend or save that money. Young teens generally don't think about whether something is a "want" or a "need" - it is typically a want, which would be spent on a game, candy or comics.
If you're a parent of a middle schooler, consider using this summer as an opportunity to teach a little more financial know-how before they enter high school and get their first job.
A 2014 University of Michigan study on high school seniors noted that the majority spend half or more of their income on relatively short-term wants and needs, such as clothes, music, eating out and other personal expenses. What's farthest down on the list? Saving for long-range goals (including college) or helping with family living expenses.
So before they start driving or reach legal working age, consider weaving these steps into an informal summer money curriculum for your middle schooler:
Introduce - or reinforce - the "Needs vs. Wants" talk. Maybe your child has a spending goal for the summer - new clothes, maybe their first smartphone. It's all about intelligent money management, even if the goal is somewhat short-term. The "needs vs. wants" talk is all about delayed gratification, the foundational behavior of healthy money management. Link it to smart shopping, encouraging the teen to price-compare purchases, gather coupons and come up with other ways to save in print and online. It's also not a bad idea to let your child start suggest thoughtful purchases when grocery shopping for the family. Before he or she can drive, you'll have a chance to discuss choices and spending while you're both in the store.
If they're not working, give them an opportunity to earn. If your middle schooler isn't picking up a few dollars babysitting or doing chores, come up with an earning opportunity for the summer. It could mean cleaning out the basement or garage or a project around the house that they can handle. It will provide you both with a chance to talk about what he or she will do with that extra income. If your child has an entrepreneurial spirit, encourage converting a hobby into a summer business. If they show empathy to help others, suggest they donate their time to help elderly neighbors with simple yard work.
Introduce the 'bucket" system. It's hard to know what to save, spend, give or invest without a system. That's as true for adults as it is for kids. The "50-25-25" rule refers to setting away 50 percent for everyday, non-discretionary expenses like school lunches or transportation, another 25 percent for savings and the remainder for discretionary purchases, better known as the latest smartphone your young teen says she or he can't live without. If your middle schooler still doesn't have a banking relationship, it's a good time to get them started. A custodial checking account will allow you to see how your child is handling money and debit-card based spending tends to more reliably track every cent. Also, for savings, you'll have the opportunity to introduce him or her to price-comparing accounts for features, savings rates and usage fees. Banking relationships should be treated like any smart purchase.
Discuss making a budget. Remind your children that if he or she wants to maximize any part of the 50-25-25 system, it's important to learn how to find value and stick to a budget. Most importantly, he or she needs to know how to track spending to stay within a budget. The number of mobile apps that allow people young and old to track their spending grows each year. Whether it's pen and paper or technology, let the teen find a budgeting solution they like. He or she will be more inclined to use it and stick to a budget.
Have resources at the ready. It's important to research various methods for teaching money skills in order to find what is most effective for your young teen. The Practical Money Skills site not only has great lesson material for young people, but great games and even a new Guardians of the Galaxy comic that can reinforce a range of smart financial behaviors. Also, MyMoney.gov, the official website of the U.S. Treasury Department's Federal Financial Literacy and Education Commission, has great games and activities for kids and teaching materials you can use to share information and answer questions for your child.
Consider being more transparent about your finances. There's no single right answer to the question of how much you should tell your children about your own finances, but keep in mind that they learn by both good and bad examples. It's important for young teens to know that anyone - even the most important adults in their lives - can make a great financial decision or a mistake. Speak openly about money, with the appropriate safeguards for personal and family privacy. Find a way to make your personal experiences part of the summer money conversation.
Bottom line: Before your tween becomes a teen, use the upcoming summer break to offer valuable lessons about managing money. It's a great time to get your middle schooler's attention before he or she starts making more expensive decisions independently.
Nathaniel Sillin directs Visa's financial education programs. To follow Practical Money Skills on Twitter: www.twitter.com/PracticalMoney
This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.