Consumer Report: Tips For Summer Jobs

With the school year drawing to a close, millions of high school students are starting summer jobs, a great opportunity for important personal finance lessons.

Parents can begin by decoding the paystub by explaining that FICA is not a person, but a way to fund Social Security and Medicare and that there is a big difference between gross and net pay. If it’s a gig job, make sure that young workers know that they are responsible for paying taxes and they will need to set aside some of their earnings to do that.

Even if your kids are under age 18, a summer job is a good reason to open a bank account.

A parent, legal guardian, or grandparent can establish a custodial bank account, which is a perfect time to explain core concepts, like compound interest, FDIC insurance, electronic bill paying, and bank fees, including minimum balance and overdraft protection.

Encourage the kids to start an automatic savings program so that at least 10 percent of summer earnings is directed into a savings account.