savings

The Value of Summer Jobs for Teens

Teenagers still have time to get summer jobs, and they might even learn a thing or two about managing money along the way.

There’s good news for teens about summer jobs: It’s not too late to get one. Although many positions have been filled, turnover is often high among teenage workers, says John Challenger, CEO of Challenger, Gray & Christmas, the outplacement firm. “Retailers, restaurants, amusement parks and the like may continue hiring throughout the summer to replace people who quit or were let go for whatever reason,” says Challenger. Look for opportunities to sub for workers who may be going on vacation, and don’t be afraid to return to employers who have already turned you down.

The extra effort could pay off, not only with cash in your pocket but also in the experience of earning money at a real job and learning how to manage it. In recent years, jobs seems to have become a four-letter word with many teens. Challenger points out that the labor-force participation rate among 16-to-19-year-olds has been declining since the late 1970s.

That doesn’t necessarily mean that kids are spending their summers lounging by the pool. A survey of teens by Junior Achievement found that among those who don’t plan to get a job this summer, 27% said they had too many other activities scheduled and 26% said they’d be away at summer camp or elsewhere.

But as I’ve written before, teens are missing out on valuable life lessons by not holding down paid employment. Showing up on time, taking responsibility, and getting along with co-workers and supervisors are all critical skills—and so is knowing how to find a job in the first place. Social media and online job sites are a great place to start. But even today, nothing beats personal contact.

Face to face. The personal touch paid off big-time not once but twice for Nate Reistetter, the 15-year-old son of my Kiplinger colleague Stacie Harrison. Nate landed a temporary stint at a science camp on the strength of his older brother, Ben, 17, who has been a popular counselor at the camp for three summers. “As soon as Nate said he was Ben’s brother, he was in,” says Stacie.

After that gig ended, Nate started looking for a new job online and saw that Baskin-Robbins was hiring. He set up an in-person interview, which went well. When he didn’t hear anything for a week, he called again and this time spoke to the manager, who brought him in for another interview and hired him on the spot. Nate makes $9.50 an hour plus tips, and he’s thrilled to be scooping ice cream and making waffle cones. “He’s had volunteer positions before, but he says it feels really good to work at a job and be paid,” says Stacie.

Earning an income also gives Nate some golden opportunities to learn to manage money:

-- Pay taxes. Right off the bat, Nate will learn that even 15-year-olds have money withheld for income taxes, which he’ll probably get back as a refund, and for Social Security and Medicare taxes, which aren’t refundable. See What Kids With Summer Jobs Need to Know About Taxes for tips on how to fill out the forms.

-- Set up a checking account, and have his pay deposited directly, if that’s an option. Those are basic moves that have a big payoff but that kids don’t necessarily think of on their own.

The America Saves campaign, managed by the Consumer Federation of America, conducted focus groups with low- and moderate-income teenagers who participated in its First-Time Workers program to gauge their attitudes toward spending and saving. The group found that although the teens knew it was important to save, they didn’t know how, such as by contributing a portion of their pay automatically to a savings account. Among the teenagers, the most successful savers had two accounts, one for spending and one for saving.

-- Contribute to a Roth IRA. Because Nate will have earned income from a job, he’ll also be eligible to save for retirement in a Roth IRA. He can contribute up to the amount of his annual earnings, with a maximum of $5,500. And he doesn’t have to use his own money; parents and grandparents can give him the funds.

-- Keep up the good work. For Nate, the lessons don’t have to end with the summer. He’s already talking about working part-time during the school year.

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