5 things your teen needs to know about her first “real” job
The situation
My daughter turned 16 this spring. Now she wants a “real” job. She snagged a summer gig at a smoothie stand at an amusement park, and she’s excited to start earning her first real paycheck. Of course, I want her to get the most out of this experience. So, what should I make sure she knows—other than how to keep her hand out of a blender?
—Conrad, Seattle
The solution
Congrats to your daughter, who’s just passed another milestone on the way to adulthood, and to financial independence. I have fond memories of my own jobs as a high schooler: working in a diner, at a catering hall, and behind a pharmacy counter. I learned a lot, and how to count change was the least of it.
Maybe you’ve been paying your kid an allowance or to do tasks for you around your home. Perhaps as she’s gotten older, she has picked up babysitting or other outside gigs. But having a job in which she’s assigned shifts and may even punch into an official time clock is a different ballgame. So is drawing a paycheck. Here are a few things to clue her in to ahead of her first day.
1. Get ready to be a taxpayer.
When a kid first becomes a wage earner, she’s likely to do the paycheck math simply by multiplying the number of hours she’s worked by her hourly rate. She’ll be in for a shock when she sees how much is taken out of her check by a payroll department. Take a minute to school her on income taxes. You can explain that, essentially, workers pay taxes to the government to fund important social goods, from infrastructure to healthcare for Grandma. (For a complete breakdown of paycheck basics, show her the graphic below.) Before your kid starts her job, she’ll probably fill out a W-4 form, which determines how much is taken out of each paycheck for taxes. Then, when tax season arrives, she may need to file a return. (To find out, you can take this quiz with her on the IRS website.) I have a handy visual guide for tax basics, too!
(Download a printable PDF of this graphic here.)
2. Don’t blow your whole paycheck at the amusement park.
Your kid’s summer workplace is a palace full of temptations. If she isn’t careful, she may squander her earnings before she even leaves the grounds. However, she must have the freedom to use some of what she earns to buy things she wants. Talk to her about setting savings goals before she starts work—especially putting some money aside for college. Not only will this establish good habits that she can carry forward into her adult working life, but it will also shield her from a syndrome that University of Michigan scholar Jerald G. Bachman has called “premature affluence.” In a nutshell, that’s teens having lots of spare cash to spend on themselves while their parents are still covering the basics, which causes them to get accustomed to a lifestyle they won’t be able to afford once they start footing the bill for those basics.
3. Open a Roth IRA.
Yes, you heard me right. A Roth IRA will let your kid’s dollars earn interest free from tax forever (as opposed to a bank savings account). If your kid is nervous about putting in money that she can’t readily take out, she should know that she can withdraw the money she puts in a Roth at any time, without taxes or penalties. The reason your kid can finally start a Roth now is that you can contribute only income that’s reported to the IRS into a Roth—not allowance or babysitting cash.
4. School comes first.
You said that your kid is doing this job for the summer, but summer jobs have a way of carrying over into the fall, especially once your kid gets used to having a bit of her own income. If she can earn enough over the summer to let her concentrate on school, that’s best. However, if she doesn’t want to quit and works a lot, she needs to scale back. Research shows that kids who work more than about 15 hours per week may start to have trouble in school—lower grades, a bigger chance of dropping out, and less likelihood of going on to earn a college degree. It’s a good idea to talk to your kid about setting boundaries with her schedule. It’s easy for a good kid to feel pressure to please a pushy boss. Check in periodically to make sure your kid isn’t too stressed out by her job obligations.
5. Set your own alarm.
If you find yourself more worried about your kid getting to work on time than she is, take a deep breath and step back. One of the critical lessons she needs to learn from a “real” job is a sense of personal responsibility. You won’t be there to get her out of bed for a Saturday morning shift when she’s in college—or when she’s started her career for real.
