Kids And Finances

Teens And Money: Teaching The Concept of Pay Yourself First


teenager.teaching kids about money, money responsibility

My son approached me over the weekend and asked me an unexpected question.

“Dad, can we do that open a savings account thing?”

When he started his part-time job, we had agreed that he could keep his first two paychecks to do whatever he wanted with. After that we would talk about him paying for some of his own expenses, such as car insurance and gas, as well as saving a significant amount out of every paycheck.

Friday was payday for him, as I noticed that a nice sum of money had been direct deposited into his account. I was impressed that he was ready to start saving, and had come to me to begin the process.

He had approached me after work on Saturday, thus the banks were closed, thus I told him that after school on Monday we would go to the bank.  We agreed upon an amount he would transfer to his new savings account. We then discussed that on every payday the first thing he should do is transfer the agreed upon amount from checking to savings.

“I can do that online?” he asked.

“Yup, I’ll show you how. This is something called paying yourself first.”

He smiled a little at the term, and seemed to understand what it meant.

“The night before payday, I’ll transfer whatever of my spending money I haven’t spent to my savings account, too.”

It was my turn to smile. I again admired his ambition to save as much as he can.

The conversation we had lasted not more than 5 minutes, but it was invaluable. It allowed me to introduce him to two very important concepts.

  1. Pay Yourself First: Pick an amount, or a percentage of your earnings that you will save. Put it into your savings account before spending a penny.  Saving only what is left before the next payday is a sure fire way to saving little or nothing. There’s always things to spend your money on,and that will likely always seem more fun than putting the funds into savings.
  2. Be Selfish With Your Money : We all work hard for our money. It should take something really special to pry it out of our hands. Just because my son has an amount of money that he can spend how he pleases, he’s not required to spend it all. Saving it for later, when something really catches his eye, is always the better than blowing it on something that doesn’t matter.

I plan to talk with him from time to time about how his savings is growing. It will also be interesting to see if he actually has money left over right before the next payday, and if he really transfers it to savings. He’s got two years of high school left, and I plan to make the most of it in teaching him how to handle his money.


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Did your parents teach you these lessons? Have you taught them to your children?

About the author

Brock Kernin


  • This is a great story! We’ve found that the more they get into savings, the less they want to spend it as well. We hadn’t thought of the idea of “sweeping” the account the night before they get the next paycheck. I used to work at a bank and one of the products we sold was a sweep account, but I’d completely forgotten about it. Smart kid you have!

  • @Kayla – I assume he will too…between buying a car and using his savings for spending money. That’s why we want him to save now! Although, it took me exactly 2 weeks in college to realize I needed to get a job anyway. LOL.

  • @Tracie- Interesting, he actually asked me if he could somehow have his checking account automatically drained the night before payday. I had never heard of such a thing….but maybe we should ask! Thanks for your comment!

  • Really looking forward to teaching my two boys about key financial principles at an early age. My oldest is almost 5 and we’ve been getting him used to the idea that money is a finite thing and that you want to make sure to spend it on the right things. I think one of the biggest (and most difficult) lessons you can teach is the time value of money. I wish I would have started saving and investing at 18, it’s amazing what compounding returns will do to build net worth.

  • @Dane – that’s a concept that’s hard to teach even to adults….I think the problem is we live in a finite world, but we refuse to accept ourselves as such. We think we are indestructible, and that we will live forever!

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