Teens can balance fun and future with a summer job
A summer job is the perfect way for your teen to start saving for their future and make a bit of spending money. Setting up a savings plan and building healthy money habits now will pave the way for a financially fit future.
Set up a Bank Account
For most summer jobs, your teen will need a bank account for their pay cheques to be direct deposited. If they already have a bank account and have some experience managing their allowance or birthday money, that’s a great start. If this is their first foray into the financial world, they will have the opportunity to gain experience with tracking their expenses, both cash and debit card spending, and bank statements.
Make a Budget
Now is the time for your teen to take on some financial responsibility – for example, gassing up the car when they’ve used it, paying for their own social activities, or managing their own phone bill. It’s a good idea to start a spreadsheet or download a budgeting app that will help track their expenses and what’s leftover for spending money.
Save, save, save
It can be beneficial for your teen to set up a separate bank account for their savings. Once they’ve decided how much they want to save (we recommend at least 20% of their monthly income go to savings), they should schedule an auto-transfer for each pay day to that account, so their savings is separate from their disposable income. Your teen should treat their savings as a fixed expense like their phone bill, so they’re not tempted to spend that money.
Something your teen may not think about when they get their first summer job is income tax. Picture this: they’ve done all the math (more passionately than they’ve ever done math before, now that you think about it) and calculated what their very first pay cheque will be, only to find it less than expected. Their first thought may be that they’ve been underpaid when their employer has deducted tax. It’s a good idea to discuss income tax and other taxable benefits with your teen. This could be as simple as reviewing their pay stub and explaining any deductions. Come tax season those deductions may result in a tax refund.
While we are pro-savings and pro-budgeting, your teen’s summer shouldn’t be all tax deductions and savings contributions. They are still kids after all and summer is a time to connect with friends, pursue hobbies, and bask in the freedom and independence of youth. That extra spending money to grab a burger with their buds, catch a flick with their crush, or finally get that new game they’ve been wanting goes a long way to making their summer memorable. When they can do all that and save for their future, that’s a win in our books.