Can you remember the first paycheck you ever received? It’s often a clear memory, mixed with pride and, often, confusion about where all the money went.
“You know, most of those kids are gonna be shocked, but I think that shock is a gift,” said Chris Everett, fiduciary financial planner and president of Everett Wealth Solutions, who joined Rob Hart on WBBM Newsradio’s the Noon Business Hour this week.
She explained that the questions that come with a first paycheck can lay the groundwork for important discussions about financial planning. These lessons can set young earners up for a successful financial future.
“That first paycheck is one of the most underestimated parenting opportunities there is,” Everett told Hart. “And it’s not because of the dollar amount, but it’s because of what you do in that moment. The habits that young person forms right now about money [are going to] follow them for decades.”
Young people might be more interested in spending than saving when that first paycheck rolls in, she explained.
“But hey, how about if a parent steps in right there with just a little intention? They can actually redirect the entire trajectory,” Everett said. It’s also a good opportunity to talk about taxes and how much they can expect to see taken out of their paychecks, as well as how the system works.
For parents who don’t know quite where to start with a first paycheck conversation, Everett has some advice.
“Introduce what I like to call the three-bucket framework: give, save, and spend,” she said. “Every paycheck in that order without fail. Because giving or generosity is a financial discipline. It’s just not… it’s not only a virtue. And then number two, saving first is going to build the habit of paying yourself before anything else gets spent, that’s huge. Then everything that’s left is guilt-free spending.”
Saving doesn’t have to be anything big. Everett said that saving even $25 per month starting at age 16 can result in big savings down the line.
“That number is staggering,” Everett said.
Not only can first paycheck lessons set up kids for success, they can help parents too. Everett told Hart that they often help heal parents, especially those who grew up with financial stress.
