$$ Lessons from that First Job  

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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.

No doubt with money burning a hole in their pockets, all that frustrated consumerism will rush to the surface. 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.

#1 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, that is, which amounts to sweet diddly squat. Save First has to be Rule #1 when it comes to earning money. Ten percent 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. Savings is a habit. So is Not Saving.

#2 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.

#3 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 unemployment insurance? And if Young Sir works for a company that offers great benefits, he’ll see deductions for premiums for those benefits too.

#4 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 where budgeting in fun money is so important. Whether it’s an entertainment line for time with friends or a pleasures line that allow a body to spend impulsively on those little things that bring joy, finding the balance is important.

26 Responses to “$$ Lessons from that First Job  ”

  1. My daughter got a job in May. She was told she’d get full time hours in the summer. Due to the economy, she is only working one day a week. Business has been slow. She’s very disappointed, but, nothing in life is guarantee’d, and she’s lucky to have a job at all (at the very least,mist something to add to her resume).
    I don’t understand how people today think kids can pay for their own tuition. Her tuition and residence fees will be close to $20 000/year (no, we don’t live near any universities, so residence is the only option). She saves all the money she can, but after babysitting and a couple of part time jobs (the last place shut down due to a lack of business), she has only saved a few thousand dollars. That will pay her books and her extras (personal hygiene items, bus passes, etc.)
    These are tough times, and I wonder if it wouldn’t just be better to give her $100000, and skip university, invest the money, buy a cheap car, and get a couple of jobs in the closest city.
    Feeling cynical.

  2. I agree Cas. We will be sending our eldest off to university this fall as well and the tab will be about $20,000 after tuition, residence, books, etc. Our son has a summer job up north at a camp this summer, but doesn’t make tons of money. Similarly, we live in a university and college town so many of the part time jobs go to university students over high-school students – so there has been little opportunity for him to work during high school. Thankfully we set money aside in RESP’s since birth and saved additional money outside of an RESP so we have enough funds to pay for his university education.

    I realize there are some parents that, legitimately, cannot pay for university for their kids because of low incomes – and thank goodness for scholarships and OSAP. However, I always struggle when I hear parents who clearly earn a decent salary say that they haven’t saved for their kids’ educations since they thing they “will appreciate it more if they pay for it themselves”. I honestly don’t know how a teenager can save/earn upwards of $100,000 in a few short working years while also attending school, and participating in volunteer work and extracurriculars.

    Just to be clear. Do I think parents should pay the full tab. No. Do I think teens and university/college students need to work and financially contribute. Absolutely. But, if you had these kids then it is your responsibility to set up an RESP at birth and contribute – ideally to the max. No excuses. If you don’t you are setting your kids up for a hell of a lot of debt in their early adult years and just plain letting them down.

  3. My first real job was refereeing soccer, a job I recommend to any teen. Since 2/3 of new ref’s quit within two years, getting games is not a problem. And you make a ton of money (all in cash incidentally, which should be declared). It’s not easy though, I was 13 when I had to tell a 40 year old verbally abusive fan to leave. His response “make me.” My response: “oh ok, well you stay, and I’ll leave. Game over, they win 1-0.” His coach made him leave for me as soon as I said that. Lesson: (a) older people aren’t all smarter than you and (b) it’s so much easier to get others to do so stuff for you, then for you to do it yourself.

  4. Louise Rayner Says:
    July 7, 2014 at 8:38 am

    Tried hard to teach my kids about saving for the future. When they starting working part-time in high school, they were introduced to “the mommy tax”. Fifty percent of their pay cheque was put away for post secondary education. It is amazing how much they saved through high school. Both took a year off before university and saved almost all they made. First year they did not have to work while in school. Oldest son graduated in December with no student debt. Youngst son just finished first year.

  5. @ Louise, I think that’s a great idea! Working for a year before school is not going to put any kid at disadvantage vs. their peers + it will teach them about the reality of working life vs. life in school. It’s a great reality check and an opportunity to save money.

    I actually wish I had taken the pre-university year off to work, earn some money and such. While I did well in school, I think I would have appreciated university more if I had that breather in between.

  6. I dunno, I see it from the other side of the desk. I appreciate that it can be hard to save for postsecondary. But I teach Univ students and I watch many of them struggle to meet their financial/time on obligations for school. Studying is usually axed first. And I’m supposed to understand that work comes before school. Um… No, school is your job at the moment! Please, please folks find a way to prioritize savings if education is in your kiddos future. Not easy, but their future-selves are worth it.

  7. Paying for university with no help is extremely hard. I did my very best to finance my own way and still came out with loans (only about $7000 so I still consider that very good after a 4 year degree). @CAS I ran into the same challenges that your daughter did trying to work during the summers in highschool (and during my year off) and I ended up juggling 3 part-time jobs (plus babysitting and anything else I could get my hands on). Taking on multiple jobs isn’t fun…especially when both places schedule you at the same time and you get to scramble to trade shifts or at worst call in sick at one place (thankfully it only came to that once or twice). I actually still have my wall calendar from the year I worked those jobs with all of my colour-coded shifts written onto it…it’s hard to believe looking back now that for a full year the only days I had off were stat holidays. I’m going to hang onto it to show my kids just how hungry you have to be sometimes in order to make a brighter future. I had my year off in 2001, so just at the tail of the last recession.

  8. Another factor is choosing a program that one can afford. If one lives in a small town with no local college or university, it’s understandably more expensive because living away from home is a must. Same for students with a passion for a particular program not available at their local school. That being said, students in large urban centers who move away and pay $20,000 a year and go into staggering debt amounts when the same program is offered at home is a colossal waste of money. One of the arguments against paying for a student’s tuition is that if it’s their own money, it’s less likely to be spent on booze. I’ve seen many students of a wealthier demographic basically drink away their parents money and move away just for the freedom and ability to party without adult supervision. I grew up in Toronto and there were three universities with a multitude of choices of programs.

    I’m not suggesting that all students or even most students who move away do it for the wrong reasons. Many move away because they really do like the program and opportunity offered by a school in another town. But a few move away just for the sake of being away from their parents and even if they do manage to at least somewhat study enough to graduate, that extra $15,000 a year in residence fees and in some cases $3000 a year in booze and parties is money in the toilet. Because I was paying myself, it was either University of Toronto, York or Ryerson so I can live with my parents and keep my costs to something manageable and I managed to save enough money for one year studying abroad and learning a new language. A great experience which was far cheaper than some of my friends who went to party at Queen’s or Western.

  9. My son started his first real job just a couple of weeks ago. He’s got this summer and next to save for university…we’re guesstimating $10,000 tuition/year. He’s not getting the greatest hours…looks like he’ll earn $2000 this summer…he’s hoping he can get 1 day on the weekends during school to help save up. If he can get a full time hours next summer, and use some of his “spending” money saved from his flyer job that he’s had for 6 years (he can’t use the “longterm savings” part), and get the marks to get the entrance scholarship, he should be able to pull off first year. We’ve got the co-op program at university, so if he goes into that and finds some p/t work during class, he should be able (or close!) to paying the rest of his way.

    Yes, it helps that the university is a 5 minute bus ride, and he’ll be getting free food and rent.

  10. I was lucky. I had a casual union job at 18 that paid about 18 per hour without benefits back in the late 90s, early 00s. That was a lot of money back then. Because of a scholarship, I had no undergraduate debt, but saved up the money for med school. Still med school was expensive and the three years I only saved up enough for about a year and a bit for med school. I then relied on my parents line of credit to finance the rest of my education. Now, at 34, I’m almost at the point of financial freedom, where I could quit being a doctor tomorrow and live off my dividend income. I attribute a lot of my success to that great union job I had and the ability for me to save up for at least a bit of med school (I don’t think my folks would’ve gotten that line of credit had I not saved up a reasonable amount) m

  11. Charlotte Says:
    July 7, 2014 at 12:32 pm

    I too feel that student’s and parents should contribute to a student’s university costs.

    I hear all the time from all ages of people that university is too expensive and students cannot hope to get through without massive loans. That is not entirely true. I know couples who are both earning solid incomes but have not saved a dime for their children. We live on one good income, and we’ve been saving for 14 years for our children’s’ college expenses.

    Our oldest child (of 3) started university this fall. She’s living at home to avoid the costs of room & board. After the orientation, she wanted to live in the dorms. I said, “It costs $8,000/year for room & board. How will you pay for that?” Her response, “$8,000? That’s not worth it!” Exactly. Of course, not everyone has the option of living at home.

    She pays for her expenses at school (books, snacks, school supplies and gas or bus money). She’s got her first real job this summer, and is saving most of it for the school year.

    We hope to get through college for her and her sisters with few loans.

    I think it takes planning, and most people just don’t plan.

  12. I have to totally disagree that spending the extra money to go to school away from home is a waste or not “worth it”. The life experience I gained from moving out and being independent starting at 18 (as opposed to 25+ like many of my peers) has served me better in life than any degree ever could. Going it on my own wasn’t the easy path (I could have stayed with my parents and commuted an hour each way to school) but I can’t imagine it being any other way at this point. I had to work more than one job during the summers as well as a few shifts a week during the school year to meet my expenses…and yes I did have a small amount of OSAP loans to pay back (about 7k) but it was doable and the fun/life skills were worth every penny of “wasted” living expense money.

    I think people are over-worried about education costs. Yes, there are some students who spend wildly or have some special circumstances that cause them to go massively into debt and that probably isn’t a good decision on their part…however when I hear people talk about how 25k student loan is insurmountable I find it questionable…a bottom of the line economy car costs 25k now and many people wouldn’t think twice of spending that on a depreciating asset…why are they then so cheap when it comes to their education and enjoying life while young. Move away to school…skip buying the car after!

    My parents had no ability to save for post-secondary education for their 3 kids…and I have no intention of handing mine money (though I will have the savings available if needed)…struggle is what makes people hungry for success. I want them to make their own way and have that satisfaction. I would only step in if I saw them unable to make ends meet despite doing EVERYTHING in their power to get there…or I would pay off the loans after the fact when I see them making their own debt repayment a priority after graduation.

  13. my daughter got her first job last fall. I am so proud of her, she managed to save up $4000 during grade 11 which paid her whole year’s insurance up front on her car this spring and still had over $2000 left over to put towards her dog grooming program next year, which is a $4000 program. so this year we know she can easily save that again and she will finish her program debt free!!! shes gonna have a great start in life, cause I had gail to teach me, and I am passing all those great lessons down!!

  14. Starting from the age of 11, I had a paper-route. Then as soon as I could (almost 16), I got a part-time job. Since then, all through the rest of highschool and university, I worked part-time (15-30 hours depending) and fall time during the months I was off.

    This taught me two very important things that I still value incredibly:
    1) I became focused and motivated to succeed. Although I was proud to earn money, I did not want to do that type of low-wage work for the rest of my life. I wanted to excel at a career I enjoyed and also could be rewarded with a decent income.
    2) The value of a dollar. I worked hard to pay my way through school and do not have a sense of entitlement. I am thankful I have a good career now, but never look down on anyone simply working to make a living.

  15. @ Pardis: if the student loan was “only” $25000, I’d agree with you. But it’s close to $20000/year no matter where we priced university. That’s $80-100 grand for their under grad program. We priced Western, to Ottawa to Universities out east. They ALL figured about the same. And our daughter received scholarships ($2000 for the first year) which barely makes a dent.

  16. My middle child spent last year working the graveyard shift at a convenience store and I didn’t charge him rent on the condition that he save for school. He saved all year and earned enough for his first year trades program, an 8 year old car, a nice bike and a second hand computer. Staying in residence with a meal plan is very expensive. Living in a basement suite with roommates is how I was able to graduate without student loans. I couldn’t afford to save anything for my child’s education. If I had to go back to 1993 and do it again, I would make different choices, including moving to a province where the cost of living was less in order to be able to save for the future.

  17. @CAS tuition is $20,000 a year? Not within Canada and not for an undergrad unless they are taking law. Do you mean $20,000 for tuition and living expenses? I graduated not too long ago and was able to make it by on about $15,000/yr on average, but I split an apartment with a roomate and ate cheaply (residence is a huge rip-off price wise). I did go out on occasion but mostly we would take turns hosting parties at our various houses. Way cheaper than the bar! If someone is doing an undergrad arts degree there’s no reason they can’t be working 20ish hours a week and still maintaining a good average. If you can’t hold a part time job along with your 12-15 hours a week of class then university might not be the place for you.

    It sucks to have to go to work at a crappy job in university while your friends are partying but sometimes those are the breaks. The student should be able to work enough to cover the vast majority of their expenses, and if they are having so much difficulty in finding that level of employment then the degree will likely be a waste (in the job market sense) for them anyways. I’m not trying to be harsh, but university of often painted as THE path to all good things in life and this isn’t the case. If university is un-affordable, or the student doesn’t have the ability to keep themself employed to cover basic expenses maybe they are better off in a vocational training program and travelling the world for a year as their youthful exploration.

  18. Charlotte Says:
    July 7, 2014 at 7:16 pm

    @Pardis–For you, it sounds like it was worth it to go away to school. For my daughter, it was not. I suspect she’ll be more motivated in a year or two to move out, and then she can. But each student is different. I don’t think the second daughter will feel the same way.

  19. I worked full time and took a full course load for the entire 4 years of my degree. I lived in a house with a bunch of roommates and never partied, ate out or went on trips. I was either working, studying or sleeping for the whole 4 years. Was it the fun college experience others were having? No, but I considered it a job and it has paid off handsomely in extra earning power with that B.A. in my pocket over the years and now I am able to afford early retirement. I am not sorry about any partying I missed out when I was 20.

  20. @ cas and others —

    You know I think this is one of those ‘life road’ choices. For me personally, I spent about the first two years of my university life studying and not much else, but then I made great friends and partied and had fun AND still studied and graduated on the honour roll.

    I’ll never have the freedom + the youth required to recover again in my life, so I actually think university is about exploring life. I was offered drugs but declined, but was offered alcohol and quite liked it (not in a bad way, but I still laugh about Halloween Weekend ’97). I studied, I dated, I partied, I had girlfriends, my own place, got my own jobs, read, learned, took courses that interested me and I figured the money would come later (it did); took courses that didn’t interest me but figured the money woudl come sooner that way (it did).

    So getting back to the point of this rambling comment – I paid for my education, mostly in the range of 95% of it. I have been saving for my son’s resp and maxing it out because I can. Do I intend to pay for his masters degree? No. Do I intend to pay for most of it? Most likely based on how expensive it is. I’m doing my mba so I actually know a little bit about paying $285 for a textbook that’ll be used for 16 weeks. I expect him to contribute as much as he can. He’s only 7, and so much can happen along the way I need to be flexible with what happens.

    I mainly contribute becasue I want him to go to university or at least not go because he thought we couldn’t afford it, and I want him to know it’s a life lesson and he can use or squander it. But whatever happens, he won’t get those years back. Ever. So choose wisely. /rambling comment.

  21. I guess I am part of the group that thinks if you want it bad enough, you will find a way. When I was in high school I was not able to find work in the summers where we lived, so I spent 3 summers living with family friends in towns where I could find full time work. Room and board was covered by my babysitting/cleaning house etc for the people I stayed with when I was not at work. My folks could not afford to help out so I worked 2 or 3 part time jobs around my course schedule for the 4 years I was in post secondary. I did have a few small osap loans but I put up with roommates in order to cut costs since res was not an option. It was a rough 4 years but it was worth it. I still managed to have a social life but it was not every weekend. Sometimes it was just being able to have a coffee with friends during a spare hour but we all made the most of the free time we had. Maybe it was easier since the people I hung out with were in the same situation as me, but I know a lot of people who paid their own way through school. It is a matter of priorities just like in real life. Eating and living cheap while in unniversity can be done, especially if you have no other choice.

  22. Not sure how Gail’s blog turned into a discussion about University Tuition costs. Thought her point was teaching the “newly” working about saving and being aware of types of deductions on their paychecks. My 18 yr-old stepson recently graduated Grade 12 and was in an IEP program. College and university are not doors open to him at this time due to learning disabilities. He got a low-paying job at an automotive assembly plant and will have $660/mo after paying income tax, CPP, EI, rent, groceries and gas for us to drive him to and from the 4 – 12:30 shift. He has decided he would like $200/mo to spend and $460 to be saved into a TFSA and in February will open an RRSP with enough money to get all his income tax back. He understands how an RRSP can be used to purchase his 1st House or Condo. He is aware that if he waits till he is 25 to purchase his 1st USED vehicle he can save a fortune in Insurance fees. He wants to enroll in a Martial Arts class with his Fun Money. He is buying his own clothes and haircuts. His Dad and I are very proud of him. We will continue to discuss saving and planned spending with him. We plan to help him apply for a Credit Card soon so that he can establish a good credit history. Should he want more than $200/mo to spend then he can have it; we are trying to teach him to be independent and make his own decisions about finances and life skills in general. We have started buying him things to set up his own apartment/ shared accommodation for when he feels ready to move out –great deals on pots and pans, dishes, etc. We are hopeful that we are setting him off on the right road to financial independence. We set him up with 2 no-fee bank accounts. One paid him $50 for a $250 deposit into a no-fee Checking Account and will give him another $50 to set up auto-deposit of his paychecks. He is thrilled to receive a free $100! He has watched me scan flyers, price match and pay for gas/ groceries on an MBNA Smartcard that pays 5% Cash Back. Time will tell but he intends to get as much out of his money as he can. Remaining Debt-Free is the next learning tool on our agenda. Thanks to Gail, he is learning “Money Rules” and “Debt-Free Forever”.

  23. I grew up in a house that didn’t talk about money and all the money that was left after paying bills went to eating out, vacations and wants – no saving. So when anything unexpected came up it was always a scramble.
    When I got older My parents paid for my cell phone, rent and gave me $1000 towards post secondary as they nor I had done any saving. They gave me a few bucks here and there if I needed it but mostly my money from my part time jobs went towards clothes, school and partying (more spent on wants then needs). I paid for my first two years of school by working my butt off and only had to take loans out for 2 years of school.
    I wish I would have saved more during my early years and spent less on wants. I didn’t even know what an RRSP was until I started my first job after university at 25 years old.
    It was tough saving for my first home while paying off student loans when I wasnt making much just out of school. and I missed out on a lot of the student experience by having to work so much.
    But I took school very seriously since it was all my own money on the line.
    Now that I have a son of my own I opened an resp and plan to contribute the max each year to help him as much as I can financially so he can finish school without debt. But I expect him to work hard at being a good student and know that the money his dad and I contribute to his school is not to be wasted or else he has to cover any classes or courses he fails due to not taking it seriously.
    Once he is old enough to work part time I plan to have a talk with him about his goals and help him set up a plan to save and prioritize his money such as contributing to his resp, tfsa and eventually rrsp. I will teach him to always make saving a priority, have money fate aside for needs, wants and fun and to learn the difference from needs and wants. I plan on always talking about money so he can have the best start.

  24. Tuition and fees have skyrocketed in the last 10 years. I graduated from an Ontario university (I was in engineering) in 2002 and I was paying $8000/year. Now, for the same program it is just over $15,000 per year. Add in $400/month for rent, $150/month for food (both absurdly low numbers), no books, no paper/pens, no computer, no internet, no TV, no booze, no nothing, and you’re talking almost $20,000 for one year. The number is NOT unrealistic, it is just that the cost of university these days is outrageous.

  25. I meant to mention this earlier….when my kid got the summer job, he filled out a form saying he earns less than $11k/year, so no income tax is deducted. This surprised me…he does pay EI, but that’s it. I guess the rules changed, as back in the day that was never an option for my generation.

    I said if he earned more than that, he’d have to change the paperwork — he laughed at me, and said maybe in a couple of years, as his hours aren’t the greatest.

  26. lawschooladmin Says:
    July 9, 2014 at 9:59 pm

    I work at a law school and find in general find that students who have worked hard through undergrad with their own money valued the experience more and tend to do better at law school. While they can’t really work during law school if they want to do well, they also seem to be the ones that don’t head off on sun trips during reading week and work their butts off. I think paying for education really does help value it. Too many applicants have the “well, I spent 3 years partying but did really well once I realized this is my life and so you should just consider my last year of school”. Right…

    Also, OSAP has a $7300/yr maximum repayable which not a lot of people know about. So if OSAP gives a law student $14600 (seems to be the max amount) for the year, they will only have to pay back $7300 of it, the rest is as bursaries. Use that when doing your calculations and it is a whole lot less gloomy.

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