Your teen’s first job might be bagging groceries at your local supermarket, or it might be life-guarding at the local swimming pool. It doesn’t matter what his first job turns out to be, there are certain things that he should know before working at his first job.
Your teen probably already has a bank account. If he doesn’t, help him to open a savings account and to develop a budget that will include regular deposits into that savings account.
If his budget doesn’t include regular savings deposits every single pay day, he might give into temptation to purchase all the goodies that he never had enough money for in the past. This point in his life could pave the way for continued good money managing or it could erode his previous good financial habits if he doesn’t proceed carefully.
Your teenager probably will already have a rudimentary knowledge about tax before he gets his first job. He will have overheard you talking, or perhaps complaining, about how your income is taxed.
He will probably not actually understand the tax system, and you will need to explain to him how he will be taxed. The first thing to do is to help him get a Tax File Number, which he’ll need when he fills out the tax form on his first day at work.
Explain to him that if he expects to earn less than $18,200 in a year, he will not have to pay tax and should claim the tax-free option on the tax declaration form at work. Otherwise, his employer will have to withhold up to 50% of his income in tax.
If he works for more than one employer, then he should claim the tax-free threshold at the job that earns him more.
Teach Him About Superannuation
Even though he’s a teen, he needs to learn about superannuation. If he is under 18, works 30 hours a week, and earns over $450 gross in a month, he is eligible to have his employer make superannuation contributions.
Go over the different kinds of superannuation accounts so that he picks the one that is right for him at this point in his life and, hopefully, in the future as well.
Daily Spending Habits
Without being overbearing, talk to your teen about his daily spending habits and encourage him to continue the good financial habits that you instilled in him as he was growing up. Remind him to track his budget continuously and keep on top of his daily spending so that it doesn’t invalidate the budget that he put together so carefully.