Is Your Teen Ready for a Summer Job?
By Jason Alderman
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 need to do some necessary paperwork first. Working teens will need their own Social Security Number (SSN) to legally apply for a job. They will also need a SSN to open a bank account to deposit their paychecks. Depending on state law, children under 18 may have to open bank accounts in their custodial name with their parents or guardians. It is also important for parents to check in with qualified tax or financial advisors about their teen’s earned income, particularly if it may affect any investments under the child’s name.
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. (http://www.practicalmoneyskills.com/personalfinance/lifeevents/work/landingjob.php)
Parents can also assist by monitoring job categories their kids are interested in, encouraging them to meet application deadlines and being aware of federal, state and local child labor laws (http://www.youthrules.dol.gov/know-the-limits/index.htm) 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 digital 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 a budgeting tutorial (http://www.practicalmoneyskills.com/personalfinance/savingspending/budgeting/) and budgeting calculators (http://www.practicalmoneyskills.com/calculators/budgetGoals.php?calcCategory=budget) 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. Most will apply to tax withholding, but such documents might also include special workplace agreements that might not always be clear to young workers. 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 withholding even as adults, so children can benefit greatly from this lesson at the start of their working lives.
Bottom line: 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.
Jason Alderman directs Visa’s financial education programs. To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney.