5 financial lessons every parent should teach their child when they get their first job
A first job for a teenager is a big milestone. Not only do they get to earn their own money, but they revel in the independence, it’s a rite of passage and an important time in their lives.
As a parent, we often mentor them in how to apply themselves at the job, skills to manage their time well and what their rights are as an employee. But have you taught them how to ensure they don’t get ripped off financially? Sure, it’s boring… but solid financial habits established early last a life time. And it’s just possible it could be a learning experience for you as well!
1 Beware the boss who only pays cash
While it might sound great to be paid cash in hand and not have to declare the income, think carefully about the consequences. What happens if there’s an accident at work? Are they covered for workers compensation? Are they being paid at the correct rate for their age and industry? What about leave, super and other benefits that are available to casual or part time workers?
2 Read, check and understand every payslip
It is law that every employee must be provided with a payslip within one working day of their pay day. It is required to include the Employer’s name, the employee’s name, the pay period, the date it is to be paid, the gross and net pay, the applicable hourly rate, any amounts taken from the pay and any superannuation paid on behalf of the employee.
Many large organisations do this through an employee portal and it is the responsibility of the employee to download. Just because it’s out of sight, don’t let it be out of mind.
Talk to your teenager about what’s on the payslip and encourage them to check the details. Are the hours right (watch for any cases where they might have been asked to stay back and so didn’t work to the roster)? Is the hourly rate correct? Did they receive an increase when they had a birthday?
Don’t assume that the employer is always right. Mistakes do happen.
3 It’s not ok to work for free
Work is work. Beware of them being asked to do multiple “trial shifts” for no pay, this is not right. Likewise, once they are employed, if they are asked to come in to train or attend a team meeting and it is compulsory, their employer must pay them for this time.
4 Casual versus part time
While the higher rates offered for casual might seem great, don’t forget the benefits of being a permanent part time employee. My daughter put up with a lower hourly rate, but was very glad when she got paid for the entire month off she had while completing her HSC exams!
Explain the pros and cons of both. Neither is better or worse but be sure you know the differences and can explain these to your teen. If given a choice decide what suits them best and make sure they are being paid accordingly.
5 Superannuation – it’s not just for old people
Superannuation is a word that makes our eyes glaze over and wish we were somewhere else, but if ever there was truth to the saying, from little things big things grow, super is it.
For those under 18, an employer is required to pay superannuation on their behalf if they work more than 30 hours in a week and earn more than $450 in a calendar month. This won’t be most weeks if your teenager is still at school, but don’t forget about the school holidays. Remember to check the payslip to see if it has been correctly calculated.
And don’t necessarily let your teenager go with the flow and use the employer’s preferred fund. Discuss the various types of funds available and see what they have to offer. An alternative fund may have low fees and offer wider choices about insurance or investment options.
There’s a stack of resources out there to help young people starting their working life, so here are some links you (and your newly employed teen) may find useful:
Here’s how to apply for a tax file number.
The Fair Work website provides an excellent starting point for young people wanting to understand their rights and responsibilities.
ASIC’s MoneySmart website has a whole section for the under 25s.
Super is a whole topic in its own right. This is a great article if you want to learn more.
If you have any other tax related questions, I’m more than happy to chat with you and offer a FREE 30 minute initial consultation. You can easily book online here and I look forward to helping you sort your finances!