Jeff Bliss still remembers his first job with fondness.
In the 1970s, the then-13-year-old Bliss hawked soda and peanuts in the stands of his local raceway. In the morning, he’d plunk down $20 or $25 for a rack of colas or a big bag of peanuts, sell his wares at a markup, then race back to the distributor with his earnings to buy more product — and start the sale process again.
During those sweaty, noisy 14-hour workdays, Bliss says he learned important financial lessons. “I think I learned more … about economics and personal finance at that job than I did in any classes I had,” says Bliss, who lives in the San Francisco area and works as co-host of The John Batchelor Show, a New York City-based radio program.
For today’s teens, Bliss’s experiences as an unsupervised 13-year-old raceway worker may seem utterly foreign. Employment among teens ages 16 to 19 has fallen since the 1970s, according to global outplacement and executive coaching firm Challenger, Gray & Christmas. This downturn is due, in part, to busier teen schedules and increased competition for service sector jobs from adult workers, according to the firm.
But are young workers losing something by foregoing the typical part-time teen job? Or do they benefit from not having to toil away behind a cash register or a hot fryer? Let’s work through the upsides and downsides of having your teen get a job.
[See: 12 Best Part-Time Jobs to Pay the Bills.]
Pros
There are lots of benefits to working a part-time gig as a teenager. Here are some of the biggies:
A lesson in personal finance. The professional working world is one of the best classrooms when it comes to offering lessons in personal finance, including real-world tutorials on income taxes, budgeting and credit.
“It is a positive experience for teens to have part-time jobs, but parents need to be partners in this learning exercise,” says Heather Battison, vice president at credit information company TransUnion. That partnership may include walking teens through their first pay stubs, helping them check their first credit report and assisting them in opening a new checking account. Teen workers can even learn about retirement — and the glorious beauty of compounding interest — by opening a Roth IRA with their part-time earnings.
[See: Basic Money Lessons You (Probably) Missed in High School.]
The chance to earn money. Clearly, one of the benefits to having your teen get a paying gig is that it gives him the opportunity to pitch in on household bills, save for college or cover his own entertainment expenses. For cash-strapped households — especially ones spending the bulk of their food budget feeding a hungry teen — that extra paycheck can be a lifesaver.
But even for families who don’t need the money to make ends meet, an extra earner in the household can provide some financial flexibility, giving parents the wiggle room to focus on saving for retirement, their kid’s college tuition or another long-term financial goal.
Professional experience. “Scooping ice cream, delivering newspapers, doing administrative support work are all skill sets that still involve managing time, managing priorities [and] working with others,” says Scott Dobroski, community expert for Glassdoor, a job search and review site. These are all professional skills that can help teens earn more in the future, ace a college interview and gain better jobs as adults.
[See: 15 Financial Steps to Take Your First Year After Graduation.]
Cons
Teen workers can also suffer some unexpected downsides when they overdo it with a part-time job. These can include the following:
Distraction from coursework and extracurricular activities. Every hour spent working is an hour that a teen can’t spend studying, playing sports, volunteering or pursuing an internship.
Not engaging in those types of experiences can cost teens down the road, including imperiling or delaying high school graduation, endangering college admission or reducing future merit-based aid packages. “It’s all about balance … if [a teen’s] grades are slipping, then that does take priority over work,” Dobroski says. As students, their biggest job is to get that high school diploma — earning a paycheck is less essential to their future success, experts say.
A ding to financial aid. One thing to keep in mind for college-bound high school students is that earning too much can actually ding their need-based financial aid.
Here’s why: Just like parental earnings and assets, a hefty student income or fat savings account can reduce a teen’s eligibility for college aid by increasing expected family contribution, or EFC. For the aid received in the 2017-18 school year, students can earn up to $6,420 without it counting against their financial aid, but earnings beyond that are assessed as contribution at a 50 percent rate. Money squirreled away in a savings or checking account is assessed at a 20 percent rate.
So, students who are working lucrative part-time jobs may want to keep an eye on how it will affect their aid package and potentially cut back on hours or spend down some savings before applying for financial aid.
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The Pros and Cons of Having Your Teen Work a Part-Time Job originally appeared on usnews.com
