Growing up in Cincinnati, Jake Cain spent his summers as a teen working at the Great American Ballpark, home of the Cincinnati Reds Major League Baseball team. He started in concessions, where he earned roughly $70 for five to six hours of work. When sales were good, bonuses boosted his pay to more than $100. When he turned 18, he worked as event staff checking bags as people walked into the games. “It’s exciting, the time flies by, and you really make decent money for the amount of time you spend there,” he says.
But summer jobs can be more than an opportunity to just pick up extra cash. “Although many young people are looking for money first,” says Cain, who now runs the website EmployedTeenagers.com, “the savvy teen should be looking for the most valuable experience.” Whether you are a teen looking for a summer job, or a parent of one who is, here are strategies for making the most of summer employment.
1. Make Connections
Bill Fish worked as a golf caddy at a country club and says the experience was invaluable. “Neither of my parents went to college, and by caddying, I was able to interact with successful people, learned a great deal about how to converse with someone, and walked about 10 miles a day while lugging around a bag,” he explains. The money was “nice” but just as important, he says, was that it gave him the “motivation to succeed in school and life.” He went on to launch an online marketing company that was acquired by a private equity firm then founded ReputationManagement.com. He recommends caddying as a great summer job for teens. “I wouldn’t trade that experience for anything,” he says.
2. Go Where the Work Is
Leon LaBrecque, founder of LJPR, LLC, says his teenage children have had to go where the jobs are. “My daughter and her friend (both very qualified) couldn’t find anything in the Detroit Metro area,” he says, “but when they came up to a resort area in northwest Michigan, both had more offers than they had time for instantly. My daughter and her friend each got two summer jobs.”
It isn’t feasible for all teens to relocate for the summer, but staying with relatives who live in resort areas, or finding a job in a summer camp may be an option for some.
Matt Heller landed a job as a ride operator with an amusement park when he turned 18. “It was a great place to learn about people, specifically regarding customer service and teamwork,” he says. “It also proved to be an invaluable education in learning to deal with large groups of people (i.e the general public) and it taught me how to handle some pretty stressful situations.” In fact, he wound up working in the industry for many years, and now supports the attractions and amusement park industry through his consulting firm, Performance Optimist Consulting. The pay for these seasonal jobs “isn’t the highest,” he says, but “in my opinion, they more than make up for it with the real-world experience they provide.” Some positions will be limited to those age 18 and older, but for the most part, these venues are looking for workers who are dependable and enjoy working with the public.
3. Do What You Love
Sarina Haryanto has pieced together work as a camp counselor, lifeguard and math tutor, says her mother, Marguerita M. Cheng, CEO of Blue Ocean Global Wealth. Her jobs have allowed her to pay for two study abroad trips: one to Southeast Asia and the other to UAE.
Sarina first earned her lifeguard and CPR certification at the county pool. When they had a job opening, she applied. She also contacted a pool management company that has contracts at various neighborhood pools. Working as a lifeguard pays “$8.60 to $20 per hour depending on venue (neighborhood pool, county recreation center, sports club, country club or college),” says Cheng, while private swimming lessons can net $15 to $30 for a 30-minute lesson. Sarina is in her fourth year of working as a lifeguard (now at the university she attends) and is also working on getting her water safety instructor certificate, which will allow her to earn even more.
As a math tutor, Sarina earns $25 an hour. She’s secured jobs through word of mouth, and especially enjoys tutoring girls. “The student can learn (math) from another girl, which is extremely inspirational and empowering,” says her mom.
Their overall advice? “Look at your interests and hobbies as an entry point.”
4. Do the Dirty Jobs
Is your teen having trouble finding work? Don’t write off the jobs no one else wants.
LaBrecque says his son picked tomatoes one summer. “He came home filthy and sweaty, but he talks about that summer job with relish.” His daughter sold shoes and learned that she hated working in retail. But she “came away a much better salesperson.” His youngest worked on a farm and “loved every grueling second.” As for LaBrecque, he says he “broke concrete, did asphalt paving and shoveled horse manure. It was a great lesson on what I didn’t want to do.”
5. Learn How Taxes Work
Teens’ summer jobs will often give them their first exposure to taxes. Understanding how teens and taxes works is crucial, says Jennifer McGimsey, CPA, CFP, with Emerald Spectrum Advisors. She explains:
As a teen, chances are your parents claim you as a dependent on their tax return. Therefore, you will not be subject to federal income tax on earnings less than $6,300, which is the standard deduction for 2015. If you are not claimed as a dependent on someone else’s return, that number increases to $10,300 since you can also deduct your personal exemption. If you are certain that your annual earnings will be below the applicable threshold, you can request that your employer not withhold federal income taxes. When you fill out your W4, indicate “Exempt” in line 7 to request that your employer not withhold federal income taxes. Keep in mind that even if you are not subject to federal income tax, you are likely subject to other payroll taxes such as Social Security and Medicare taxes.
Some summer jobs are exempt from payroll taxes. For example, if you provide babysitting or mow yards and are under 18, you are exempt from payroll taxes. Also, if you work for the family business and are under 18, you could be exempt from payroll taxes.
Your employer may desire to compensate you as a contractor rather than an employee. That sounds great at first since income taxes or payroll taxes won’t be withheld from your check. The downside… self-employment taxes. You will be subject to self-employment tax of 15.3% for any amounts that you earn above $400. You will be able to deduct your business expenses from your earnings, but that involves keeping good records of those expenses. Unless you are truly a contractor, be cautious about agreeing to be paid as one.
6. Start Saving Now
Not surprisingly, financial planners share a consensus that a summer job is a great way to get a teen into the habit of savings. “Having earned income makes you eligible to contribute to retirement accounts like IRAs and Roth IRAs. You can contribute an amount equal to your earned income, subject to the 2015 max contribution of $5,500,” says McGimsey.
A little can add up. A teen who socks away just $1,000 in a Roth IRA for four years starting at age 16 could have $84,000 socked away at age 65 assuming a 7% annual return, or $127,000, assuming an 8% annual return, explains Dave Demming, CFP and president of Demming Financial Services Corp. “Starting early gives you such a huge start,” he says.
Of course, not all teens are going to be thrilled about setting aside money for retirement. LaBrecque says that in his household, his kids are expected to pitch in 25% of the cost of college. So when it comes to summer jobs, “We have a ‘parent match’,” he says. “Save $1 for college, and the bank of Mom and Dad matches 100%. Heck, we’re paying anyway, so why not get some mileage and ingrain the saving and matching habit early?”
Finally, teens can learn a lot from the job-hunting process itself. “Up to 80% of jobs are never listed publicly,” says Cain. “So be proactive and approach a local business that you have a true interest in and find out if there is a way you can help.” That’s a life lesson many of us will have to learn at some point or another. It might as well be while we’re young.
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This article originally appeared on Credit.com.
This article by Gerri Detweiler was distributed by the Personal Finance Syndication Network.