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Teens & Summer Jobs: 3-Ways To Maximize The Experience

Summary:
The labor market is tight. However, summer jobs for teens, especially in leisure and hospitality are in demand. While just 35% of teens aged 16-19 participated in the labor market last year, global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc. predicts job opportunities could increase around 5% this year and the teen participation rate could rise as well, according to its 2019 annual outlook. How can you as a parent make the most out of your teen’s first summer job? Here are 3 money tips. Don’t let an opportunity to make the most of the experience fade away before the new school year starts. Celebrate the ‘rite of passage’ from payout to paycheck. Most likely, there’s been a long-standing allowance agreement at home. Sure, you taught the basics of

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The labor market is tight. However, summer jobs for teens, especially in leisure and hospitality are in demand.

While just 35% of teens aged 16-19 participated in the labor market last year, global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc. predicts job opportunities could increase around 5% this year and the teen participation rate could rise as well, according to its 2019 annual outlook.

How can you as a parent make the most out of your teen’s first summer job? Here are 3 money tips. Don’t let an opportunity to make the most of the experience fade away before the new school year starts.

Celebrate the ‘rite of passage’ from payout to paycheck.

Most likely, there’s been a long-standing allowance agreement at home. Sure, you taught the basics of save, share and spend early on, helping your child formulate a simple yet impressionable strategy of monetary discipline. It’s time to re-visit the discussion. The addition of sweat equity adds another dimension to save, share and spend. Have a “big picture” talk and explore how take-home pay was allocated.

Teens & Summer Jobs: 3-Ways To Maximize The Experience

Celebrate the wrap-up of such an accomplishment at a special yet informal setting – Allow your child to share deeper thoughts around save, share and spend. Initiate the “Level 2, Triple S” protocol. 

No, it’s not the title of a new Mission Impossible movie. It’s how Save, Share and Spend takes on renewed relevance in proportion to the past. It’s the “Triple S, Level 2” rite of passage. As a child, allocating an allowance or cash for chores, was important. With a summer job, parents and kids make allocation decisions with greater impact.

Oh, there’s another interested party looking to share in your child’s success: It’s the IRS. Taxes are now a consideration. As an employee, your child was to complete a W4 form to indicate the correct amount of tax to be withheld from each paycheck. For 2019, a dependent youth doesn’t require a tax return filed if earnings do not exceed $12,200.



Fund a Custodial Roth IRA.

Working leads to new investment vehicle opportunities. Fund a Custodial Roth IRA with a savings allocation of at least 30% of summer earnings directed into a Roth as a contribution. For 2019, the maximum that can be placed in a Roth IRA is $6,000. Even invested conservatively, a $1,500 deposit, earning annually at 4% has the potential to be worth over $11,000 tax-free by the time your teen reaches 67 years old.

Teens & Summer Jobs: 3-Ways To Maximize The Experience

Time is your child’s greatest ally; part-time employment provides the opportunity to jumpstart full-time retirement.

Start a cash-flow discovery exercise.

Emphasize budgeting in your discussions. It’s crucial children maximize what’s left of a paycheck after taxes and savings. Teach kids to make saving a priority and to pay themselves first. It’s one of the best financial habits you can instill as parents. Set aside 20 minutes, initiate a “cash flow discovery” exercise to review expenditures and the overall work experience. A paycheck is exciting. Some kids get carried away and go through what I call an “independence splurge” where spending increases along with the first paychecks.

Richard Rosso
Richard Rosso has been in the financial services industry for 26 years. He is a Certified Financial Planner and Chartered Investment Management Analyst. Richard has helped individuals and families make holistic financial decisions working for companies like Dreyfus and Charles Schwab. He has been part of the Clarity Financial family since November 2012. Richard is a featured writer for MarketWatch and a contributor to Money Magazine, NASDAQ.com, Nerdwallet, Christian Science Monitor and USA Today. He is featured regularly on Houston television and radio, including Fox, KPRC, KHOU and 740AM KTRH. He has been quoted in and interviewed for The New York Times, The Wall Street Journal, USA Today and New Yorker Magazine. Richard is a personal finance manager and senior investment advisor for Clarity. Richard M. Rosso, MS, CFP, CIMA Senior Financial Advisor ClarityFinancial, LLC

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