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Millionaire Kids Ezine, Issue #006 -- 3 Tips For Socking Away Summer Teen Job Earnings
June 18, 2007

Can you imagine a summer in which your teenager rises before noon, carries a brown-bag lunch to work and dutifully deposits a big chunk of each paycheck into savings?

Wouldnít it be great if your employed teenager dips into his own cash for movies, gas and dinner rather than using your dime?

Iím a funny woman, right?

But the reality is usually that high school and college students spend their hard-earned summer job money on $4 lattes, fast-food meals galore, and paychecks that get blown on iPods and cell phones.

Not much thought about banking any of the money.

It drives me crazy to see teens spending money like water and having little or nothing to show in their bank account after working all summer long.

Never mind that a $4 caramel mocha ice coffee is HALF of an hourís pay!

If you have teenagers heading for the work force this summer, like my 16 year old daughter Rachel, do them a big favor before they burn through their paychecks by covering the financial bases, especially in these three areas:

1) Pay yourself first

This is the easiest savings habit of all. If your childís employer offers an automatic payroll savings plan that deducts money from paychecks directly, take advantage of it.

Itís an easy way to save because you never see the money in the first place. On the other hand, if you wait to pay yourself last, you may never see it.

So how much should be socked away?

This is the time to talk about goals. Is your son or daughter working to save money for college? A car?

My husband and I expect our kids to save HALF of any money they earn, but at a minimum, they should be able to sock away 10% of their take-home pay.

After all, your kids have NO bills, right?

Rather than depositing paychecks into a basic savings account that will earn pennies each month, why not get open a cash-management account at a financial institution where money gets swept into a higher-yielding money market fund?

Check out these best money market accounts with great rates... Some young workers may even qualify for benefits such as shares in the companyís stock or participation in its 401(k) retirement, especially if the job extends beyond the summer. This is a great opportunity for them to learn about investments and the stock market.

With my own kids, I have them stash their cash in a money market account until it reaches $250 dollars, and then we move it into a mutual fund or ROTH IRA for long term investing.

Be sure to take advantage of ROTH IRAs as soon as your teen earns his first real paycheck...

There are 3 criteria I use when choosing a mutual fund:

1) The fund has to be a value fund (for stability and high growth potential)

2) The 10 or 15 year average yield of the fund has to be 12% or better (the 50 year average of the stock market is 13.3%)

3) It has to be a no-load fund or fees of no more than 1.5%

Remember, developing a savings habit while young is SO important to be able to take advantage of the power of compounding ó where your money grows as the interest earns interest.

2) Rein in spending

Building up the bank account does not necessarily depend on how much you make, but how much money youíre able to ďhang onĒ to.

Thatís the message to repeat over and over to your 15-year-old earning just above the minimum wage at the swimming pool snack-bar counter.

Talk to your son or daughter about setting spending limits.

This does not mean turning them into a total tightwad, but go over the implications of spending money daily on lattes instead of pouring a cup of coffee at home, or going out to lunch instead of packing a lunch.

It may not seem like much, but all those $2 and $3 dollar items add up fast ó money that could be better spent on college textbooks or funding a Roth IRA.

Finally, donít carry around loads of cash.

The more you have, the more tempting it is to spend ó or lose, which brings me to my third topic.

3) Control your ID

Getting a summer job means itís time to open up a checking account a possibly a debit card.

Make sure that your childís personal identification is protected, that checkbooks, for example, arenít left on a front seat in the car or even the glove box.

Thatís a tempting target.

As for debit cards, keep control of personal identification numbers. Donít carry the PIN in a purse or wallet, either.

Even if your childís brain cells have been tested to the max in calculus class during the school year, committing four numbers to memory should be easy.

Random Acts of Tithing

While your kids are socking away cash from their summer job, remind them to share their bounty.

Most food banks get pretty sparce during the summer months, so food donations are especially appreciated during these lean months.

Or maybe get even more creative and donate paper goods...paper towels, toilet paper, etc.

Profitable Home Business Idea:

I recently read in the paper about a highschool senior who not only made enough money to buy a used truck, but also donated part of his take to a battered women's shelter.

Here's what he did:

He went around town asking local businesses to donate services and goods for a coupon book where part of the proceeds would be given to the local women's shelter.

Then he went around town direct marketing or selling his $20 coupon book.

People in town were happy to buy a local coupon book that saved them hundreds of dollars and also helping out with a local charity...

Not to mention the charming young teenager doing the selling!

Not a bad way to spend your summer days, is it?! For more profitable niche business ideas, check this website...

Fast Ways For Little Kids to Make Extra Cash

Here are 3 Quick Ways to Make Some Cash:

1) Vacuum out and wash Dad's car for $5

2) Sell cold, bottled water at the beach on a hot day (unlimited $$!)

3) Have a garage sale or list some items for FREE on Craig's List

It's Good to Know...Financial Terms For Kids

1) Tax - A certain percentage of money you have to pay the government that goes towards schools, roads, parks, etc.

2) Home Mortgage - A loan from a bank to buy a house that you have to repay

3) Debt - any money that you owe someone - whether it's your parents, friends, or the bank

Cheap Family Fun

Summer is the best time to get together with family...have a barbeque, a picnic, a bonfire, or meet at the beach.

It's our tradition to always have a 4th of July party with the whole gang. Everyone brings their own meat to throw on the grill and a dish to pass.

We provide the games...volleyball, bocce ball, soccer, and some times touch football!

There's plenty of watermelon and corn on the cob for everyone - and we even get to see a fireworks show put on by the uncles.

You see, that's one of the advantages of living in the country!

Spending time with your family is always cheap entertainment and a great way to stay connected.

Even if you're not a millionaire yet, spending time with your kids and family will make you FEEL like a million bucks.

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