It’s summertime again and that means the kids are home from school. The problem is not that they are home it is what to do with them. we want to send them to summer camp or they are trying to earn enough money to but the newest game system, all of which means money and we can only give them so much in allowance, even extra chores means we are spending lots of money. Even as a grandparent it is much more expensive in the summer between going to the pool and taking them with us on vacation.
So, what is a parent to do. If you own your own business the solution is simple, put them to work and they can make money and pay for space camp themselves. When your child works for you there is a few perks such as the not paying certain employment taxes until they turn 18. Now keep in mind this doesn’t work for all business’ types such as C-corps but for the most part it gives us a way to pay our kids for actual work. Here is a great article on how this works.
Now if you have teenagers, they often have part-time summer jobs that can carry over to the school year. I found when my kids were in high school that this could be both a blessing and a curse. You need to set down boundaries before they start working such as how much goes into savings and how much they can spend on anything (within limits) they want. You can also set limits on how long they work and even work hours especially during the school year.
Another option is for them to start their own business. Some of these businesses have even gotten the attention of Shark Tank. Don’t be discouraged if your child’s business becomes very successful, you might end up working for them but you will know that they will be on their way to independence.
I find the most important thing to do though is sit down and have a conversation about taxes. Every year I have someone’s teen who has not had any withholding taken out because they didn’t realize they would go over the limits. This also can lead to problems at tax time because they file their taxes incorrectly due to the dependency exemptions or they don’t file at all and then IRS notices are received for your 16-year-old.
Make sure your kids know that social security and Medicare will be deducted from their paycheck. This is a good time to go over what those payments are for and an opportunity to teach them a little history because suddenly it affects them. This is also ideal for teaching them budgeting and even some retirement planning – yes a child can have a retirement account if they have earned income and those can be used later for college or for the purchase of their first house without penalty if you set it up correctly to start with.
There are some great resources for teaching kids about money Here are just a few of them.
One of the games I played with my kids and was great for teaching money was obviously Monopoly – there are even some variations that teach things like stock markets and economics but my favorite game to teach about money and business is Cashflow for kids – they no longer make this but you can often find it on amazon.
Now keep in mind that I home-schooled my kids so some of these resources were not just summer activities but made up a lot of their education on money. You can also schedule a time when I can talk to your kids about money and business especially if they are starting their own business.