Financial Perspectives – Spring 2008

Putting Summer to Work

Going away to camp. Hanging out at the mall. Lounging on the beach. All great ways to spend the summer.

But if your ‘tween or teen wants to take a job, earn some money and get a head start on learning to manage it, the summer could indeed be time well spent.

A summer job offers young people experience that schools often cannot:
helping them become more responsible, work as part of a team, develop a solid work ethic and practice managing their money.

Here are some steps that you and your child can take to get started.

• Start by checking out school and community center bulletin boards, job websites, and friends and neighbors. Or your son or daughter may try a more entrepreneurial route – establishing a babysitting, tutoring, pet sitting or lawn mowing service, for example, or perhaps something a bit more “21st century,” like helping the less tech-savvy with their computers.
• Determine “take-home pay” for the entire summer. Understanding the difference between gross pay and “take-home” pay can be a real eye-opener, so make sure your child is aware of how deductions will affect actual income.
• Help your child understand the difference between “needs” and “wants” – for now and in the future. Transportation to work, for example, is a need, the newest shoe style is not. Depending on your own situation, contributing to college costs may be a “need” for your child. If so, he or she should start saving for it. Similarly, if your teen wants a car, he or she should set funds aside to help meet that objective.

Before embarking on this summer adventure, your child and you should investigate any tax consequences or federal and state regulations that might affect what and how much they can do.

Finally, a summer job should be challenging, but not overwhelming. Your child will be an adult for a long time – but only a kid once.

Off to an early start

• Young children learn by example. So set one worth following in managing your own finances.
• Give your child a regular allowance – how much depends on your situation and the neighborhood’s “going rate” – but it should be enough to allow your child to buy something minor without having to first save for months.
• Many experts say that routine chores should simply be required– and not the basis for your child’s allowance. On the other hand, encourage your kids to do additional work for extra money.
• provide an incentive to save, perhaps by matching whatever your kids put away.
• Help them open a bank account where they can watch their interest build.
• Explain money in terms that children can understand. Instead of saying something is too expensive, point out that a coveted toy costs as much as x weeks of allowance.

Raymond James & Associates and Raymond James Financial Services are wholly owned subsidiaries of Raymond James Financial, Inc. (NYSE-RJF).

The information contained in this newsletter has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. We may, from time to time, have a position in the securities mentioned and may buy or sell such securities in the course of regular business.

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