This was originally published on Monday, May 23 ,2016 in the Pacific Daily News. Click here to subscribe to the PDN.
Summer is just around the corner.
You may have a teenage child who is eager to try out the work force. Summer jobs teach teens how to manage money and what is expected of them once they are ready to start a career.
There are many advantages to working a summer job. Help them understand that there is temptation to buy the latest gadget, game, or clothes and that treating yourself every now and then is ok. It’ll give them the true gift of understanding the value of money because they worked for the money they’ll spend.
- Savings account: Find a good starter account. Find one that does not have many penalties especially for maintaining a balance below a certain minimum. Many banks offer bank accounts for kids of all ages. Usually credit unions charge a lower fee and pay more interest. Help your child learn basic money management skills. Technology has made it easier to keep up with your budget. There are apps that kids can download right onto their smartphones.
- Investing: Get kids interested in different ways to invest their earned money. There are stock market games that kids can play. It uses real time information on what is happening in the stock market. They invest game money and use it to compete with each other. Once they see the potential of investing their money and potentially making money they may be interested in actually investing some of their summer earnings.
- Retirement: Many kids still in high school have not even thought about retiring. This is a great tool to teach the concept of compound interest and how it can work for them. Starting a retirement fund at sixteen versus thirty-five can create a nice nest egg with the possibility of early retirement. Besides the lure of a larger retirement fund and early retirement there are other benefits to a teen Roth account. If money is used to purchase a first home the money can be withdrawn tax and penalty free.
- College: If your child is considering college it does not hurt to have them pay for a portion of it. After all, if they understand how much hard work went into paying the portion they put in they might understand how much time and energy you have put into covering the rest. Cost of tuition, books, fees, living quarters and just the basic college necessities keep rising every year.
- Down payment: Once your child gets their driver’s license they may want a vehicle to go with it. As much as we would all love to wave our wand and have one magically appear in the driveway, we know that paying for another vehicle can be out of our budget. By working summers they can save up for a down payment, pay for fuel, and even help with the insurance.
Besides the financial aspects of a summer job, they help foster confidence, time management, the opportunity to learn more about themselves, networking, and gaining experience. It may even open up a door to a career they never thought about.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo .com and read past columns at the Money Matters blog at http://www.moneymattersguam.wordpress.com.