Rich lessons for the newly employed

Regardless of whether you’re coaching Baby Girl through her first summer job or helping Boyo figure out how to manage his first job after graduation, there are some money lessons that are a must. With all that frustrated consumerism rushing to the surface, young workers often feel like the new-found money is burning a hole in their pockets. Hey, it’s natural. And maybe a month long shop-your-brains-out period is appropriate to blow off some steam. If it goes any longer than that, it’s the beginning of a bad set of habits that will present some significant problems later. Here are four lessons to live by: Save First Loads of people believe they have no money to save because they spend all their money with a plan to save what’s left. And they do save what’s left, which amounts to sweet diddly squat. Save first has to be rule No. 1 when it comes to money. Ten per cent is a good place to start. But it’s not where the discussion should end. For teens saving for university or college, the discussion needs to start with, “How much would you like to have saved in total?” And move to, “How much will you put away from each pay to achieve that goal?” For new full-time workers, starting in their 20’s mean they can save as little as 6% of their income because they have so much time on their side. And no, savings should not be delayed in favour of student debt repayment. They can be done concurrently. Savings is a habit. So is not saving unfortunately. Think Needs vs. Wants While you might think that earning your own money teaches the needs before wants lesson, it ain’t necessarily so. Parents who allow full-time workers to live at home without paying rent are teaching their kids that they have no responsibility for their own needs. The result: young adults get into the habit of satisfying all their wants. That’s a really tough habit to break. Even part-time students should have to ask themselves if what they’re buying is worth all that hard effort they had to put in to earn the money they’re spending. If they don’t, like so many of their less wise elders, they’ll end up frittering away resources they’ll wish they had later. The Tax Man Cometh Paycheques contain all sorts of interesting lessons. When Alex got her first pay from No Frills, she was astonished to learn she would earn less than all the women she was working with by dint of the fact that she was a student. “Seriously,” she said. “I’m doing exactly the same job.” And then there were the union dues. “OMG!” she exclaimed. “When is the union going to do anything for me as a student working part-time?” Good question. New full-time workers are often surprised that their $24,000 a year doesn’t translate into $2,000 a month into the bank. The tax man takes a slice. Have you talked to your young’uns about everything that taxes pay for: schools, health care, libraries, police, roads, and the like? How about things like CPP and EI? And if Young Sir works for a company that offers great benefits, he’ll see deductions for premiums for those benefits too. Have Fun Earning a paycheck isn’t only about doing the detail and delaying gratification. Part of the reason we drag our sorry butts out of bed, rain or shine, is so we can enjoy the fruits of our labour! That’s why budgeting in fun money is so important. Whether it’s an entertainment line for time with friends or a pleasures line that allows you to spend impulsively on those little things that bring joy, finding the balance is important.