Son's First Paycheck

Amy's teenage son is about to receive his first paycheck. She asks Dave and Rachel about saving, spending and teaching him to set goals.

QUESTION: Amy in Rockford, IL, has a 14-year-old son. He has a full-time job this summer and is about to receive his first paycheck. They have taught him about spending, saving and giving, and his first goal is to buy an iPad Mini. Amy asks Dave and Rachel if the money should be allocated from his savings or his spending, since his dad is going to put $2,000 toward a fixer-upper car.

ANSWER: (Rachel) The way mom and dad raised us — and correct me if I’m wrong, dad — the savings category for a 14-year-old is more of a long-term spending category. At that age, they’re not going to be saving for retirement or something in the distant future. Now, if college or a car is in the picture, then maybe he needs to make that a higher priority than an iPad Mini. But as far as I’m concerned, a 14-year-old’s savings category is a long-term spending category.

(Dave) Sure, which means an iPad Mini is okay. The big question we would’ve had around our place would be the car. We required our kids to buy their cars, and we agreed to match whatever they saved. At our house it would have sounded like this: “You can use your savings for an iPad Mini, that’s fine. But you have to understand this $400 thing is actually costing you $800 if we’re matching you.” We’re going to talk that part through, and it would be one and done. If it were out of savings at our place, given that the car is in the picture, we’re probably going to do that one. But from then on, your savings is going toward your car and the other stuff is coming out of spending. You’ve got to be realistic about saving up toward a car.

The other thing is this … In the kids’ minds we were perfect at all this. Of course we weren’t perfect — there were a lot of things we messed up in this deal — but we convinced them we were, I guess. More than anything else, we were always asking ourselves this: What’s the lesson? What’s the takeaway here? The takeaway is not an iPad Mini. The takeaway is not picking up a car. The takeaway is teaching the kid to save for a goal. But the danger of the mathematics is part of the lesson, too. If he goes and buys an iPad Mini, then something else and something else, he’s going to have about $3 in savings. He’ll be riding a bike, because his car’s not going to be running.