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Teens and Summer Jobs: 5 Ways to Help Them Secure Their Financial Future

By the time you read this, summer will be wrapping up. Swimsuits and camps are on the way out, giving way to homework and busy schedules. If your teen had a summer job, they're probably winding down. And while the job might be ending, there are lasting lessons they can use to help build their financial future. 

According to research from Greenlight, 73% of teens want to learn more about financial literacy. With their earnings in hand and a fresh memory of the work experience, now is the perfect time to instill valuable financial lessons. Here, we’ll cover some of the benefits of summer jobs for teens and how you can help them on the path to a secure financial future.

Summer Jobs Are Good for More than Pocket Money

For your average teenager, a paycheck is the best thing to come out of a summer job. Having spending money without needing to ask you for it is a huge step in building independence.

However, there are a lot of other benefits from summer work to explore with your teen:

  • Responsibility - Summer jobs are more than just filling a specific role. Teenagers have to manage their time, adhere to workplace rules, learn how to deal with unexpected problems, and communicate with a variety of people. All of these little pieces combine to form a set of responsibilities that gives them a taste of adulthood.
  • Confidence - Academic research has found that high school students who work are better off than their peers who don’t, including a stronger sense of confidence. Learning new skills, overcoming challenges, and dealing with workplace conflict all provide experience that they’ll rely on throughout their career.
  • Networking - Most kids have wide social circles between school, sports, and other activities. But summer jobs are their first chance to network professionally. Between coworkers they fit well with or bosses they impress, the people they meet can open doors in the future.
  • Saving & budgeting - Teens have no shortage of ways to spend their money. Balancing short-term desires against saving for bigger expenses is a perfect real-world introduction to budgeting. For example, would they rather see a movie and go out for dinner this weekend, or set that money aside for a ski trip with friends this winter?
  • Taxes - Getting a paycheck for less than they expect can be disappointing, but it’s a valuable lesson in how tax withholding works. And it builds into concepts like Medicare, Social Security, and understanding how paying taxes will benefit them later in life.
  • Building a resume - Even if your teen’s summer job isn’t in a field they want to pursue later, it helps boost their resume. Employers tend to prefer young adults who have an established history of holding a job, and references from supervisors will come in handy down the road.

How to Help Your Kids Build a Secure Financial Future

Their job might have been just for the summer, but the opportunity for financial growth has lasting benefits. Teaching teens about money is an ongoing process and using the earnings from summer work is an ideal way to do it. 

Here are five ways to keep the momentum going and help young adults prepare for the future.

Establish a Banking Relationship

If your kid doesn’t already have a savings account, opening one is a great first step. Most banks offer parents the option to open a joint account with their children until they turn 18, at which point you can remove yourself from the account. Savings accounts are a great way to teach kids the power of compound interest, and having an established banking history can help them establish other savings and investment vehicles once they’re 18.

Create a Budget

Learning how to budget is critical to success in life once your child moves out to college and the professional world. While the 50/30/20 rule might not apply—most teenagers don’t have to worry about mortgages and insurance payments—the principles are the same. Sitting down and helping them map out how they want to spend their money drives home the fact that frivolous spending now prevents you from doing things you want—or need—to pay for later.

Build Retirement Savings

Teenagers aren’t usually thinking about retirement planning, but it’s never too early to start. Opening a custodial IRA allows them to contribute up to $6,000 per year and it’s a good way to educate them on investing. More importantly, it gives them a big headstart on saving for retirement. Assuming an 8% annual growth rate, contributing $6,000 per year from ages 13 to 18 would grow to $2½ million by the time they're 70.

Plan for Taxes

Your teenager might not have made enough from their summer job to be required to file taxes. But even if they aren’t, it’s a good idea to walk them through the process. Teach them how to read a W2, fill out a 1040, and determine whether they need to file. If they get a refund, discuss how they want to use it and how it fits into their budget and savings plans.

Establish Long-term Financial Plans

Building good habits as a teenager will make it easier to stick to a long-term financial plan later in life. Talk openly about their goals and dreams, and how they want to reach them. Is grad school in their plans? Do they want to buy a home? Have they considered if and when they might want to start a family? These questions might seem daunting to a teenager, but honest discussions help them understand that what they do today is planting the seeds for their long-term plans.

A big part of financial planning is turning to trusted experts. Concepts like saving and budgeting are simple, but retirement plans and tax codes can be complex. That’s where fiduciary advisors can help. A Certified Financial Planner can help you teach your child valuable financial lessons and provide advice on what you can do now that will benefit them the most later.

Interested in learning more about how we can help you build a secure financial future for your family? Contact us to schedule an introductory call today.

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