Jul 05, 2018 | Family

When your teen is making real money

Kids love the idea of making money. There’s a reason for the enduring popularity of the lemonade stand. But the truth is, the average child can expect the following road to earning—and increasing—income. Elementary school? Maybe you’re getting a few bucks a week in allowance. By middle school, you might be walking the neighbor’s dog and mowing lawns for spending money. In high school, after-school and summer jobs come with an hourly wage, but still take a backseat to the most important gig: school, so you can go to on college, get that degree, and—four years later—start pulling a grown-up salary. (Finally!)

So what happens when your kid becomes a serious earner while they’re still under your roof—and underage? We’re living in the #TeenBoss era, after all, when viral celebrity can leave families reeling in the wake of overnight success. An influx of cash can flip the script of the money talks we have with our kids—even if we still need to stress the same values of saving and spending smarter.

For one New York family, the learning curve of teenage mogul-dom has been steep—but ultimately one that’s shown them they’re mostly on the same page about financial decisions and goals.

Carter’s* success has come by a (somewhat) more traditional avenue than YouTube stardom. Recruited by a modeling agency on the streets of Manhattan three years ago, the 17-year-old now walks runways and appears in editorial shoots around the world for deep-pocketed fashion companies.

“At first it was really weird to hear the numbers,” Carter said of her paychecks. “I had previously been making, like, $20 an hour for four hours of babysitting. It shocked me.”

And in the mercurial fashion industry, there were more shocks to come. “You get a text from an agent, and that means you’re going to London the next day,” said Carter’s dad, Steve*. Or just as easily, a job that seemed to be a sure thing will fall through—on a last-minute text-message basis. At first, “it seemed a bit unreal,” Steve said. He’d expected his daughter to work more typical jobs in high school. “Maybe she’d be a camp counselor, work at an ice cream shop, work at the Gap,” he said. “Normal, like the kind of jobs I had when I was in school.”

Carter’s family was lucky to find help as they adjusted to having a teenage daughter who earned adult money. Her agency connected them to a tax professional who specializes in the entertainment industry. He filled them in on the appropriate accounts to open—including a Child Performer Trust. New York state law mandates that at least 15% of a minor’s earnings as an actor, musician, model, or other performer be placed in a special trust that she will gain access to when she turns 18. (Sets a great precedent for automatic savings throughout the rest of your working life.)

“At first it was really weird to hear the numbers.”

Accustomed to getting paid in cash for babysitting, Carter can find it hard to conceptualize how much money she’s really making. “I don’t really see my money or handle it,” she said. “I do feel more free to spend money on food and indulge than before, but I’m putting all of it pretty much away for college—and to travel later in my life.”

Thankfully, when it comes to those goals, everyone is on the same page. “We’re not, like, an ostentatious family at all,” Steve said. “It’s not like everybody loses their head and goes and buys a Camaro.” He and his wife agree that most of what Carter earns is “going to be for big things. Definitely college. Hopefully she’ll continue to make some more after paying for school so she can use it for the things she wants to do, her traveling. She also gives some of it away to charities.”

Still, he admits that the family is relatively new to this and could be doing more to make Carter’s earnings go further. Some of Carter’s money goes into a Vanguard investment account (a great move—$1,000 invested at age 17 could be over $40,000 by retirement age). The family is also “trying to write off more business expenses to lessen the tax burden [of her income]. But we need to be more astute about dealing with the money and how to make more money off of it.”

For now, though, education remains the top priority. Even with all the travel, Carter continues to attend her New York City high school. “A lot of the shoots are in New York, so I’ll just go after school or miss a day,” Carter said.  “Every now and then I’ll travel to L.A. or some other random place, miss school for a few days, and make up the work I’ve missed.”

Steve admits that school would probably be more of a challenge if they didn’t live in the city where much of Carter’s work happens, but the family committed to her education from the beginning—and it’s rare in the modeling world.

He’d expected his daughter to work more typical jobs in high school. “Maybe she’d be a camp counselor, work at an ice cream shop, work at the Gap.”

“I’m proud that she’s able to maintain her school life,” Steve said. “Her schoolwork is really the most important thing.” While she is working, he added, Carter has a tutor, and “they work around her school schedule as often as possible.”

This is key, because whether she continues to model or not, college may ultimately be the most important financial move of Carter’s career. On average, a college graduate out-earns a high school graduate by over $1 million over a lifetime. Having a degree will also be important for Carter to advance in the working world off the runway. In that way, her story is more like that of a typical high school student than you’d think; she’s making good grades and saving up to contribute to her education (which is actually a predictor of a high GPA in college).

Sometimes, Carter craves even more normalcy—and more tangible evidence of her earnings.

“I like to be busy, and modeling is a lot of waiting,” she said. “Plus, you hear about the money that you’re making, but you never really see it. I always liked running from one babysitting gig to another. Getting cash.”

So it’s not surprise that when she has downtime between shoots, you’re still likely to find Carter babysitting for neighborhood kids—for the very New York rate of $20 an hour.

*Names have been changed for privacy.