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(From the Financial Literacy Blog) – With the academic year coming to a close, many students are gearing up for summer break. Before returning to school in roughly three months, they’ll fill their days with sunshine, swimming, campfires, and maybe—a summer job. Seasonal employment can be a great opportunity for teenagers to earn some money with all the downtime they’ll have until the school year starts up again. However, teens can walk away with more than their paycheck after working a summer job. It can be a great opportunity learn some valuable life and financial lessons they can take with them into adulthood. Here are five examples:
The Importance of Budgeting
When someone starts making their own money, it can be a lot easier for them to grasp the concept of budgeting. As soon as they start earning a paycheck, it’s likely their mind will start spinning about all the things they can buy. Instead of having to ask mom or dad to fund their wants, they can purchase them on their own. However, can they afford their wants? If they’re spending their paycheck as quickly as they’re earning it, they probably will learn that buying some things requires both sacrifice and planning. By tracking their earnings and spending, they can develop a plan that will allot them the amount they need to purchase higher-priced items. Budgeting is one of the most important habits to learn and carry into adulthood.
How Taxes Work
Learning-by-doing is the idea that we are capable of learning more about something when an action is performed. While students are learning about taxes in the classroom, having their hard-earned money pulled out of their take-home pay is the ultimate lesson. It’s not uncommon for teens working their first jobs to be disappointed when they see their paycheck. They were promised an hourly amount, but the pay isn’t consistent with that promised sum. It’s a great opportunity for a parent to discuss how local, state, and federal taxes are withheld from paychecks to pay for things like emergency services, road maintenance, schools, healthcare, Social Security, and more. Being familiar with tax withholdings is an important part of managing one’s finances.
The Value of Networking
Summer jobs offer teens opportunities to learn about positions and pathways they weren’t previously familiar with. Connecting with coworkers and customers alike can lead to the development of professional relationships, which can open the door for other career opportunities down the road. Working with others also enhances teens’ interpersonal skills, as they may be working with people of varying ages and backgrounds. Regular social interaction can build a skill set that is critical for young people to achieve their potential.
Time Management
Working a summer job helps teens develop better time management. If they are late to work, the employer may let them know that continued tardiness could lead to consequences like losing their job. Punctuality is a trait that will benefit both teens’ professional and personal lives—now and in the future. Teens will also learn the ins and outs of work-life balance. They will learn how to manage their time away from work—that way they feel accomplished at home and on the job.
A New Perspective
Summer jobs can give teens insight into what they may want to do after they graduate. They may discover they really enjoy working with groups of people, or perhaps they learn they’d rather work on their own. They may discover they enjoy working with their hands more than being in an office environment. A summer job can also offer perspective and a new-found respect for roles they never thought about before. They may now understand why their parents say no to certain expenditures, as they are likely making an effort to manage their money wisely. Additionally, they may become more patient, understanding, and thoughtful when interacting with those in customer service roles, as they may have been in their shoes while they worked their summer job.
The Bottom Line
Beyond simply earning a paycheck, there can be tremendous value in getting a summer job. While having extra money in their pocket is often the main outcome for teens, the lessons they learn while on the job may be the most valuable at the end of the day.
Do you have a teen starting a summer job this year? Reach out to your local credit union to open a checking account to link to their direct deposit.
The League spoke with WMTW Channel 8 on June 15 about this topic during a Total Money segment.