MANHATTAN, Kan. – A summer job can provide opportunities for youth – and their parents.
A first paycheck can be viewed as a milestone, yet youth earning $8 an hour for a 40-hour work week can be surprised when their paycheck falls short of simple math: $8 x 40 = $320, said Elizabeth Kiss, K-State Research and Extension family resource management specialist.
“Many are unaware of payroll, social security and other taxes or deductions, and don’t know the difference between gross and net pay,” said Kiss, who urged parents to use these first-time experiences to help their children grow in their understanding of financial management.
According to Kiss, youthful workers also may not have considered the cost of working.
If a young person has a food service job, he or she might earn a fixed hourly wage working in the kitchen. If waiting tables, he or she may earn a lower fixed wage, but be allowed to earn tips.
While it might seem that youth waiting tables would have the opportunity for greater earnings, business – and tipping – can be unpredictable, and he or she may earn less than anticipated.
Wait staff also may not be immediately aware of requirements to report tips and share them with support staff, such as those who clear and set the tables.
Food service workers also may be required to pay for meals during working hours, and may be required to rent or buy a uniform, Kiss said.
A sales or customer service position might require khaki slacks, while farm, ranch or factory work might require steel-toed boots, leather work gloves, etc.
The cost of getting to and from work also can add up, she said.
And, while youths’ earnings may not live up to their expectations, many will have more money than they have had previously, said Kiss, who encourages parents to talk to children about their financial needs and goals.
Ask questions such as:
* What is your goal in landing a summer job?
* How much do you expect to earn this summer?
* What do you hope to accomplish with your summer earnings?
* Will you be using the money to meet regular financial responsibilities? Or, pay for extras?
* Have you considered your short- and long-term financial goals?
* Do you have money in savings to cover your short-term goals?
* Are you making contributions toward your long-term goals?
* Have you thought about establishing an emergency fund to cover unexpected expenses, such as a car repair or replacing a computer?
* Have you considered setting aside some summer earnings to bridge the gap when you will be able to work less during the school year or when between jobs?
* Have you considered your net worth?
While net worth might seem a grown-up concept, it also can be a good exercise for youth and beginning workers, Kiss said.
Identifying assets and deducting liabilities, such as student loan, car loan, credit card or other debt, and regular financial responsibilities can highlight the need to practice financial management, Kiss said.
In developing a savings and spending plan, younger workers often can benefit from deciding how financial responsibilities can be met, and making a simple budget to meet their goals, she said.
An idea often recommended for young couples and professionals, placing designated funds in an envelope for each spending category, also can be helpful in managing a budget successfully, Kiss said.
More information on managing money successfully is available at K-State Research and Extension offices in each of Kansas’ 105 counties and online.
Have trouble saving? Check out Kansas Saves and on Twitter.