For many teens, there's nothing more exciting than receiving the first paycheck from a summer job – a sure-fire ticket to fun and freedom. It's also a great opportunity for parents to encourage proper money management.
Parents or guardians may need to do some necessary paperwork first. Understand the laws around the legal working age in your country, and find out how to open a bank account, acquire a tax identification number, and report income to the tax authorities in your region.
After that, it's about encouraging teens to get a jump on their job search. The recent job market for American teens has been tough and investigating particular kinds of openings should start months in advance of summer hire. Networking is also important – teens can reach out to friends, neighbors and other trusted adults about potential jobs in the community. Also, it is never too early for teens to learn resume writing and job interviewing skills. The Practical Money Skills website's Landing a Job page offers useful background to help teens get started.
Parents can also assist by monitoring job categories their kids are interested in, encouraging them to meet application deadlines and being aware of relevant child labor laws to steer them from unscrupulous employers.
Technology changes quickly, so tech-savvy teens may be ahead of the game when it comes to searching for work online. Leading job search engines are a destination for seasonal job openings, and many allow users to customize searches for specific positions and employers. However, teens may need to be reminded about their social media activity before they begin any job search – anything a teen posts publicly on the Internet may be seen by a potential employer.
Banking is another major step in the life of the working teen, though they don't need to wait for that first job to get started.
Many parents open bank accounts for their children as early as their first allowance – after all, digital banking makes it easier to monitor and transfer money without a trip to the branch or ATM. Paychecks – on paper or via direct deposit – make familiarity with the banking system an even greater necessity. Check with their bank to see what types of accounts are offered for children and teens – some banks offer a wide variety of custodial accounts where parents can track and assist their child's spending and saving activity.
A teen's first job is a great opportunity to introduce budgeting, saving and long-term investment skills. Your child may be working over the summer to save for a particular desired item – a cellphone or a trip – or more extensive goals like future college expenses. The Practical Money Skills site offers budgeting calculators for a range of purposes.
When the job offer comes, there's one more thing parents can do. Getting hired means a flurry of paperwork that can be confusing; parents can help their children review those documents before signature. When that first paycheck arrives, consider sitting down to inspect a teen's first paper or electronic pay stub. Many people don't understand their paycheck even as adults, so children can benefit greatly from this lesson at the start of their working lives.
A teen's first summer job is a great way for parents and children to collaborate on job-hunting and money management skills that will produce benefits for a lifetime.
This article is intended to provide general information and should not be considered health, legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.