Your child’s hit a new ‘first’ milestone – their first payslip! When it comes to helping your child become experts at navigating their payslip, here are three helpful conversation starters.
1. Have you checked your payslip?
Their payslip breaks down where their income is going, and it’s important to keep a look out for:
- Hours worked – does it match their roster?
- Pay rate – does this match what they were promised?
- Tax withheld – not fun, but important to understand! If they have multiple employers, or have changed jobs recently, make sure they only claim the tax free threshold once, or be prepared for a nasty surprise come tax time.
- Superannuation – their safety net.
If they spot something weird, it’s important to ask their employer.
2. Should we set up a budget?
Every dollar has a job, and it’s up to them to pick what they want to use it for. The best way not to spend all the money you earn is to come up with a plan for what to do with it – including always paying yourself first by setting aside money for the future! A good framework to keep in mind – although you can choose is:
🤑 Everyday spending for your needs (eg: bills) and wants
🎯 Save for a Goal
🛡 Rainy Day (for when things go wrong)
🌱 One Day (Pay yourself first – save and/or invest)
Some people use rules of thumbs to split their money. A commonly used one is 50% Needs, 30% Wants, 20% Save for full-time workers. Other parents ask their children to split 50/50 fun money/savings, but ultimately the split will depend on personal circumstances and preferences.
Ensuring they allocate money into stacks helps set them up for those rainy day moments, and future goals. Our handy Budget Tracker can help you both navigate how to break down those hard-earnt dollars.
3. How are you tracking your spending?
When they track their spending, they can see where their money went, and what their money habits are. Take the budget you’ve devised and after a month write down what was actually spent against which categories. Getting them into the habit of tracking their spending, even once a fortnight, can help them build their money confidence, as well as understand whether their everyday behaviour is in line with where they want to be.
Their first job and pay slip is a milestone, and an important one to celebrate! These three conversation starters can help your child learn smart money habits and empower them to earn, save and spend wisely.