27 Feb When my kids get jobs, what should happen to the money?

Q. My two teenagers will be getting jobs this summer. They want to use the money to spend today — I want them to save some for the future. What’s a reasonable way to set up some sort of matching program, and how much, to encourage them to save?
— Mom

A. It’s a great question, and one every parent should ask.

Summer jobs are a wonderful way for teenagers to learn about more than just money.

The opportunity to develop a sense of responsibility, work on a team and create good interpersonal skills are among the many benefits of a first job, said Claudia

Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge.

She said setting goals for the money they earn is the perfect way to make sure they don’t end the summer with nothing to show for it.

The first step will be setting up a checking account to receive their paycheck deposit, she said.

“A debit card may come with the account and will enable them to learn how they work,” she said. “It’s important for your teens to know that there is not a bottomless pit of money for the debit card to access, but rather the funds in the checking account put a limit on how much it can be used.”

As you research banks, be sure to ask about any fees or minimums that might be associated with the account, Mott said. Many banks will offer service-fee-free accounts to teens that do not require large balances, Mott said.

In the process of researching the right bank for your teen’s checking account you might also want to consider a savings account that is linked to the checking, she said. The reason for the two accounts would relate to the savings goals that may be put in place over the summer.

“All too often, money that is sitting in an active checking account gets used for one reason or another and the `savings’ disappear,” she said. “You’ll want to help your teens set up a regular transfer from the checking to the savings so that they can watch the balance grow and the progress they are making towards their goal(s).”

A terrific goal for working teenagers is setting aside some of their earnings to cover their college spending money, Mott said. Being responsible for the funds they use for life outside of the classroom is an education in budgeting and making choices on how we spend that will serve them well forever, she said.

There may be another long-term goal that they want to set money aside for such as a contribution to a car down payment or a Roth IRA contribution, Mott said.

“Setting up a Roth IRA is a way to get their retirement savings off to an early start,” she said. “Most custodians who offer Roth IRAs allow online account set up and some have Target Date Retirement funds that have no minimum investment. These accounts allow for tax-free growth and withdrawals are also untaxed at distribution.”

For young people, and those in low tax brackets, they are an effective way to save for the future, Mott said. Other goals that might be considered for your teens this summer would be covering the cost of their gas, take out meals, entertainment or clothing.

“While there are no hard and fast rules as to how much to put towards a goal, common percentages range from 15 to 20% of the net paycheck,” she said. “Once they have a paycheck or two in hand, it will be easier to decide how much might be able to be put aside after they cover their regular expenses.”

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This story was originally published in February 2025.

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