1. Teaching Financial Literacy to Teens: Introduction
  2. Teaching Financial Literacy to Teens: Making Money
  3. Teaching Financial Literacy to Teens: Budgeting
  4. Teaching Financial Literacy to Teens: Credit and Debt
  5. Teaching Financial Literacy to Teens: Cars and College
  6. Teaching Financial Literacy to Teens: Account Reconciliation
  7. Teaching Financial Literacy to Teens: Investing
  8. Teaching Financial Literacy to Teens: Moving Out
  9. Teaching Financial Literacy to Teens: Conclusion

As kids reach their teens and their financial needs grow – mobile phones, a car, clothes or sports equipment, even prom – they may be interested in earning more money than they can bring in from their allowance – if they get one –and the occasional odd job. There are many benefits to having a job. Even part-time work can provide teens with:

  • a source of income
  • career guidance
  • independence
  • real-life experience
  • responsibility
  • the chance to develop interpersonal skills in the workplace
  • the opportunity to learn new skills
  • time management experience 

Managing School and Work

Of course, there are also drawbacks to working. Teens with jobs – especially those who work more than 20 hours per week – may have a harder time completing schoolwork, earn lower grades in school (often due to fatigue and lack of preparation), and experience increased stress (trying to "fit it all in"). They also may develop a negative view of work.

Working is different for each kid. While one teen may suffer in school because of a job, another might thrive because of a growing sense of independence and accomplishment. Because no two kids are alike, it’s important for parents to pay attention to how work may be affecting their child and make changes to the job and/or hours if needed.

If your child has trouble balancing school and work, a summer job might be a great alternative since it won’t interfere with school. Popular summer jobs include:

  • amusement park worker
  • babysitting
  • camp counselor
  • dog walking and pet sitting
  • food service
  • grocery-store worker
  • landscaping
  • lifeguard
  • office intern
  • programming
  • retail worker
  • tutor 
  • web designer

(For more, see 15 Great Summer Jobs for Teens.)

Fair Labor Standards Act (FLSA)

Before starting a job, it’s a good idea to review what an employer can and can’t expect from your child. In the U.S., the Fair Labor Standards Act (FLSA) of 1938 ensures that "when young people work, the work is safe and does not jeopardize their health, well-being or educational opportunities."  The Department of Labor sets forth guidelines for permitted jobs, based on age:
 

Age

Permitted Jobs (According to the U.S. Department of Labor)

Under 14

  • Deliver newspapers
  • Babysit on a casual basis
  • Act or perform in movies, TV, radio or theater
  • Gather evergreens and make evergreen wreaths
  • Work for a business owned entirely by your parents as long as it is not in mining, manufacturing or one of 17 other hazardous occupations
  • Non-hazardous agricultural jobs outside of school hours

14 and 15

  • Retail occupations
  • Intellectual or creative work (e.g., computer programming, tutoring, acting, playing an instrument)
  • Errands or delivery by foot, bicycle and public transportation
  • Clean-up and yard work (excluding hazardous equipment)
  • Work in connection with cars and trucks, such as pumping gas and washing/polishing
  • Some kitchen and food-service work
  • Cleaning vegetables and fruits
  • Loading or unloading objects for use at a worksite
  • Limited tasks in sawmills and woodshops
  • 15-year-olds who meet certain requirements can perform lifeguard duties at traditional swimming pools and water amusement parks
  • Non-hazardous agricultural jobs outside of school hours

16 and 17

  • Any job that has not been declared hazardous by the Secretary of Labor (hazardous jobs include occupations such as manufacturing or storing explosives; coal mining; using power-driven woodworking machines; mining; roofing and work performed on or about a roof; trenching and excavating; and anything that provides exposure to radioactive substances and ionizing radiation)
  • Any farm job and any time

18

  • Any job
 

In addition to restrictions on the jobs they can legally perform, younger teens are limited in the hours they can work: 
 

Age

Hours

14 and 15

  • Work must be performed outside of school hours
  • Up to 3 hours per school day, including Friday
  • Up to 18 hours per week when school is in session
  • Up to 8 hours per day when school is not in session (e.g., summer vacation)
  • Up to 40 hours per week when school is not in session
  • Between 7 a.m. and 7 p.m. on any day, except from June 1 through Labor Day when nighttime hours are extended until 9 p.m.

16 and 17

  • Unlimited hours

18

  • Unlimited hours
 

What Parents Can Do

Getting a job can be a big step for your teen – and a learning experience for everyone involved. You can help your child have a positive experience by:

  • discussing a job's advantages and disadvantages
  • identifying the job's responsibilities and what the employer may expect
  • creating a daily and/or weekly schedule to promote effective time management, allowing for some family time in the schedule
  • teaching practical ways to handle tough situations at work and school (often, these teaching moments are the result of something that’s already happened)
  • supporting your child – if things are going well or if your child is having trouble balancing work and school 

Taxes and the Working Teen

Explain to your teen that when people earn wages for working, they don't get all the money they earned. Some of the earnings go to the federal and state governments as taxes that are used to pay for roads, public schools and other programs. Review your child's pay stub with them and point out:

  • gross pay (the total amount earned)
  • federal taxes
  • state taxes
  • unemployment
  • Social Security and Medicare taxes
  • net pay (the "take home pay") 

Depending on your teen's earnings, he or she may have to file an annual income tax return with the IRS. Keep in mind, tax returns are driven by income, not age, so even young people may be required to file. According to IRS Publication 929, a dependent who has only earned income (such as wages from a job) must file if they earned $6,300 or more. It’s much lower for unearned income (such as from interest): Your teen will have to file if he or she had $1,050 or more in unearned income.

Note: The IRS states: "A parent of a child under age 19 (or under age 24 if a full-time student) may be able to elect to include the child's interest and dividend income on the parent's return. If the parent makes this election, the child doesn’t have to file a return."
 
A dependent who has both earned and unearned income must file a return if their total income is more than line 5 of the IRS worksheet:
 

Filing Requirement Worksheet for Most Dependents

1.       Enter dependent's earned income plus $350

 

2.       Minimum amount

$1,050

3.       Compare lines 1 and 2. Enter the larger amount

 

4.       Maximum amount

$6,300

5.       Compare lines 3 and 4. Enter the smaller amount

 

6.       Enter the dependent's gross (total) income. If line 6 is more than line 5, the dependent must file an income tax return. If the dependent is married and his or her spouse itemizes deductions on a separate return, the dependent must file an income tax return if line 6 is $5 or more

 

 

Some dependents may have to file a tax return even if their income is less than the amount that would normally trigger filing. For example, your teen might have to file if he or she owes Social Security and Medicare taxes on tips not reported to an employer or on wages received from an employer who didn’t withhold these taxes; or if he or she had earnings from self-employment of at least $400. When in doubt, consult with a tax specialist. Keep in mind, even if your child is not required to file, it may be a good idea to do so because he or she may be eligible for a tax refund.

 


Teaching Financial Literacy to Teens: Budgeting
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