How Summer Jobs Teach Teens About Money
Do you remember your first job? Whether it was flipping burgers or mowing lawns, you probably recall the thrill of that extra cash. For many teens, a summer job is not only a step on the road to maturity and independence; it’s also a practical introduction to basic finance.
Earn and Learn
Although a summer job isn’t a fit for every teen, it can be a positive experience with multiple benefits. Beyond the opportunity to earn money, summer employment offers teens real-world lessons in time management and communication, while promoting personal growth and enhancing resumes. A good job fosters a strong work ethic, increases confidence and develops problem-solving skills.
But back to the money — summer jobs are a low-stakes, hands-on way to learn about everything from income and taxes to banking and investments. When your own hard-earned dollars are part of the equation, economic principles and personal finance become less abstract and much more interesting.
Jeremy Johnson, a senior vice president at BOK Financial, recalls the financial lessons he learned as a kid mowing lawns.
“I was fortunate enough to partner up with one of my close friends and mow about 12 different yards, which kept us very busy,” he says. “I learned return on investment and how to price our services. I had to keep track of my costs such as equipment, gasoline and transportation. We learned very quickly which yards were worth mowing and which weren’t.”
Budget and Save
Johnson and fellow private wealth advisor and senior vice president at BOK Financial, Todd Hofmann, encourage working teens to budget and save.
“So many people these days have the ‘race to zero’ mentality of spending what’s in the account as soon as they have enough to buy what they want,” says Hofmann, whose own summer jobs included lawn mowing, ice cream scooping, grocery bagging and prep cooking. “It’s good to enjoy the fruits of your labor, but maybe spend half and save half.”
Johnson thinks creating a budget, whether analog or digital, is a smart place to start.
“If you don’t manage your money, it will manage you. Know where your money is going and how your spending and saving are getting you closer to your goals,” he says.
Stash Your Cash
Knowing where to put your summer cash might keep it from burning a hole in your pocket. According to Johnson, that budget can also help determine the best vehicle for savings.
“Start with the end in mind—what is the purpose of the savings,” he says. “This will dictate the account needed and what types of assets to purchase, such as a money market savings account, short-term CDs and perhaps equities for longer-term investments.”
Hofmann suggests starting with a checking/savings account.
“When it gets over a couple of thousand dollars, consider a Roth IRA and put that money to work in more growth-oriented places,” he says. “Mutual funds are a great place to start since they usually have a $1,000 minimum, and you can add $50 after that, either randomly or on a monthly draft from the checking. Keep in mind, there are risks in the market, and you shouldn’t invest in the stock market what you don’t plan to leave to grow for five to10 years.”
Johnson agrees that Roth IRAs are a great tool for longer-term funds.
“Remember, it’s not timing the market; it is time in the market,” he says. “If you can fund a Roth IRA as a high school student, this can grow into a healthy sum of money when you access this later on in life, and if accessed after age 59.5, its all tax free.”
You can find free, basic information about Roth IRAs (including how they differ from Traditional IRAs) at websites like investor.vanguard.com, fidelity.com and schwab.com.
Establishing Credit
While no parent wants to encourage offspring to run up debt, intentionally building credit by establishing a history of responsible borrowing is another thing altogether. According to Hofmann, high school is the perfect time for adolescents to start talking about credit and how to build it.
“One way is to either get a cash-secured credit card or a regular credit card. Charge little expenses like lunch or gas for your car, but try to keep the monthly amount at $200 or less,” he says. “Most importantly, pay it off each month. The way the credit cards work, they don’t like to be ‘alarmed.’ They want you to use the card — they make money that way — but the systems react very negatively to carry over balances and large charges for fear you can’t pay it off. Even if you can pay off a larger charge, the system reacts negatively. Over time, you can increase spending and charges, but still pay it off.”
Both of Hofmann’s kids did this during high school, and their credit scores were over 800 by the time they graduated.
Good “Cents”
Hofmann and Johnson aren’t just wealth advisors, they’re also parents who’ve both received and given their share of familial financial advice. In particular, Hofmann recalls his mother’s words, “Work ethic beats everything else. You never have to worry about a job if you’re the best. If you always show up, if you’re the first one in and the last one to leave, and if you out-work everyone, always striving to be the best, you will be in demand even when job markets get tough.”
Hofmann advised his own kids to start investing in their employer’s 401(k) retirement plan as soon as they had a “real” job, putting in at least as much as the employer’s match, but 10% if possible.
Johnson’s favorite advice came from his grandfather.
“He and I were fishing when I was about 14,” he says. “My pawpaw looked at me and said, ‘Son, when you start to invest in stocks, always look to buy utilities. People have to pay their electric bill.’ That had such an impact on my thinking moving forward about dividends and stability.”
Make the Most of a Summer Paycheck
- Spend some, save some (try a 50/50 split)
- Track where your money goes
- Set a simple savings goal
- Start small—consistency matters more than amount
Julie Wenger Watson is a freelance writer who’s worked in all aspects of music promotion. She’s also Co-Director of “Live From Cain’s,” a public radio show pilot.
