Northwest Arkansas parents, like most parents, are looking for great advice on how to save money.
So we turned to the experts. Every month we share advice from the professionals at First National Bank of NWA, the sponsor of our monthly feature, Savvy Banking.
Brent Leas, a vice president at FNBNWA answers our latest money question:
Q: My son is starting his first summer job this year. I wish I had started saving when I was a teenager. What is a good percentage for him to start saving?
First of all, congratulations to your son! That is a big step!
While getting your first job is one of those exciting, grown up things to do, it still can be accompanied with some nervousness & apprehension. Nothing compares to that first paycheck and knowing that you earned it all by yourself, but then you have to decide what to do with your newly earned moolah- spend it all or put some of it back?
This situation creates the perfect opportunity to teach our kids a lesson in responsibility. Keep in mind it is “their” money, but try sitting down with him/her and assist them with coming up with a budget. This will keep them from squandering away all that hard-earned cash.
Help them come up with specific categories tailored to their lifestyle and needs and make sure they understand in order for the budget to work, they must stick to them.
Here are 7 possible “basic” budget categories to consider:
- Savings: A good starting point is about 5% to 10% of your net income
- Giving: Personally, I believe it is good to instill some sense of gratitude at an early age
- Gas/Car Maintenance
- Car Payment & Insurance
- Entertainment: movies, bowling, etc.
You can help your new wage-earner in determining the right amounts to apply to each category listed above.
I always encourage at least 5% in savings and 10% in giving. Then, you can apply the remaining amount to the various categories as best fits your child(ren)’s needs/situation.
Before long, they will begin to see the reward of putting some back each time they get paid as their savings account balances increase and you get the benefit of knowing you are raising a future self-sufficient, savvy adult!
Brent Leas is Vice President – Community Banker for First National Bank of NWA. Brent will be the Retail Team Leader at the new Bentonville branch, which will open early next year. He has banking, investment services and business development experience, including asset management, financial consulting and commercial insurance. Brent began his banking career 21 years ago, here in Northwest Arkansas.
Brent also serves on the Bentonville Public Schools Board of Education as an elected member. He and his wife, Stephanie, have been married for 20 years and they have three children, Breanna, 18, Josiah, 16, and Sophia, 7.