Here are ten beneficial tips for parents of employed teens. Investing the time in teaching your kids these tips now will be a big investment in their future, and their financial success.
- Be informed. The Fair Labor Standards Act (U.S. Department of Labor) sets the minimum age for employment at 14. It also limits the number of hours worked by minors under the age of 16. The FLSA does have exceptions to these limitations. For example, minimum age requirements do not apply to minors employed by their parents or guardian. Youths of any age may also deliver newspapers; perform in radio, television, movie, or theatrical productions; and babysit or perform other minor duties around a private home.
- Teach your teen how to correctly read their pay stub – Teach them the differences between net and gross income, tax deductions, federal and state tax deductions, other withholdings, etc.
- Explain the purpose of and differences between a W-9 (Request for Taxpayer Identification Number and Certification form) and a W-2 (Wage and Tax Statement) – Once you’ve explained the differences between and the necessity of these two forms, assist them in filling out their W-9. Explain the tax withholding process so they have no surprises come tax time.
- Explain the convenience of direct deposit and help your teen complete a direct deposit form. Direct deposit is not a mandatory practice by all employers but it is very convenient for small businesses as it saves them check printing costs, and bank processing fees. Some states do allow employers to require employees to accept direct deposit of wages and bonuses. Others allow employees to choose between direct deposit and traditional paychecks. Your teen should be able to obtain a direct deposit form from their employer. If not, they can get one from their banking institution.
- Assist your teen in opening their own checking/savings accounts (if they don’t already have one) – Most banks require parents to be a joint holder of a minor’s savings or checking accounts. Take your teen with you when you open their account and discuss the differences between a checking and savings accounts, the use of debit cards, etc. Demonstrate how to deposit and withdraw money from each account.
- Teach your teen the proper way to write out a check and a deposit slip. These are generally NOT things your teen is learning in school but are essential life skills. Help your teen become familiar with the elements of a check and deposit slip, what it means to “bounce a check” and the penalties associated with it, etc. Remind your teen to safeguard their bank checks to avoid the potential of identity theft and/or fraud.
- Teach your teen how to balance their bank accounts. Go through your teen’s bank statements with them and teach them how to enter their deposits and expenditures, and balance their accounts. It’s amazing how many adults don’t know how to do this, or don’t do this on a regular basis. This is a must-have tool for every working teen!
- Have discussions with your teen regarding expenses - Determine what they will be using their own money for and what costs you will cover. When teens start paying for some of their own things they begin to develop a sense of what it takes to provide for themselves, and they might just be more money savvy and careful.
- Create a budget - Help your teen create a realistic budget based on what they need to spend their money on. FamilyMint can help with this process. While our Money Management Certification Program is ideally suited for grades 5 & up (ages 10+) certain aspects of the program can still be used with older kids.
- Encourage your teen to track their spending and make adjustments to their budget as they see what their habits are. There are several ways they can do this—with a free app on their phone, a spreadsheet or even using a pencil and paper. The important thing is help them to stay on track with their financial goals and reduce any impulse spending.
According to Arnold Adam, a banking practitioner at a major bank, “When you demonstrate to your kids how to manage and save money, you’re helping them develop good financial habits that can last a lifetime.” FamilyMint is committed to partnering with parents in teaching financial literacy to children.