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You may pay an allowance to your kids as a reward for optional work or required chores—if so, you're already providing them with a roadmap to the value of hard work.
If they learn to associate their actions with value, you're a step ahead in teaching them to manage money. The next step? Giving your child the chance to earn, spend and save on their own (under your supervision, of course).
Teaching your kids the value of earning money can set them up for future financial success. Here, we share 10 ways they can make money in their youth.
10 Ways Kids Can Make Money
- Get a job: Kids can earn their first official paychecks early in a variety of industries, such as food service or amusement parks.The Fair Labor Standards Act allows kids 14 and older to hold jobs, though their hours are limited until they reach age 16. State law may be more restrictive, so check your location's specifics to find out.
- Babysit or tutor: If there are younger kids in the vicinity, your kids can earn while practicing responsibility by babysitting or tutoring.
- Recycle: Your state may offer decent returns for those willing to recycle materials like bottles and cans, printer ink cartridges and more. Imagine, you could be inspiring the next Greta Thunberg while your kids earn spending money on recycled cans.
- Stream: If your child is loath to part with their video games, they may be able to monetize their game sense. Streamers on Twitch (the most popular platform for gamers) and budding YouTubers can start raking in profits as young as 13.
- Play: Maybe streaming game sessions isn't their cup of tea, but they could earn money or gift cards for testing games and apps through a service like Mistplay.
- Open a lemonade stand: It may be a bit cliche, but this is a classic for good reason. They'll need to weigh profits against the cost of doing business, and they can get creative to maximize earnings. In colder months, they could switch over to a hot chocolate stand, complete with marshmallow toppings—and maybe an optional espresso addition for adults. One thing to keep in mind, however, is that some municipalities require food sellers to have permits (yes, even kids running lemonade stands).
- Create: Whether you have a young Picasso on your hands or your kid picked up macrame instead of fidget spinners, you can help them sell their creations on Etsy or at local venues such as weekend markets and independently owned shops.
- Write: Writing is another way to utilize creativity for income that doesn't require much in the way of supplies. Blogging can be a great way for kids to earn through dedication, research and individuality—and it can earn serious cash if you're ready to help them dive into affiliate marketing or advertising.
- Sell: With a yard sale or online sales platform, children can discover value in selling their unused toys and clothes. Perhaps they want a new game; show them they can generate the money to buy it by selling a game (or games) they no longer play.
- Help the neighbors: Your kids can offer to do yardwork, walk dogs, housesit or run errands for residents on your block who are willing to pay for their services.
Why It's Important to Teach Your Kids How to Earn Money
We already know that teaching your kids about money is best done early—in fact, a Cambridge University study found children start grasping money concepts as young as 3 years old, and financial lessons learned by age 7 will stay with them throughout their lives. Every kid is different, but one of the best approaches to help them secure responsible money habits is for them to learn by doing. That means integrating financial lessons into their lives, including how and why we work.
Kids don't shoulder the weight of bills yet, but they can experience cost and worth when they generate their own incomes. You can use your child's introduction to earning to teach them about budgeting both their cash flow and their time, so they'll grow up knowing the value of work.
No matter how your children learn and earn, monitor their progress and guide them throughout. Take the time to discuss the importance of their work, and be a good example for them to observe. They'll watch and absorb your money habits, so be sure you're showing them the best ways to handle their burgeoning finances.
Do Children Have to Pay Taxes?
With work comes an unavoidable financial necessity: taxes. Luckily, tax season is yet another opportunity to teach your kids how to handle money. Whether or not they pay taxes on their income depends on how much they made and where they made it.
Kids need to file federal tax returns if their earned income from working exceeds the year's standard deduction for a dependent child. For 2021, that equates to either $1,100 or, if they earned more than that amount, their earned income plus $350. If they pulled in profits from investments or dividends (aka "unearned income"), the amount is added to their earned income. For unearned income, you can file on their behalf by claiming the cash on your own tax return. Additionally, self-employed kiddos need to file if they made over $400.
Even if they don't have to file their own tax returns yet, they will someday. So, consider including them in your own tax filing. Sifting through the paperwork and process with a parent can make tax season much less daunting when their time comes. If you're not a tax expert yourself, no worries: There's value in teaching them to seek a professional for help with taxes too.
Money in the Bank
As for what your kids should do with their hard-earned cash? That's up to you—or, even better, you can leave it largely up to them. Teach them as much as you can, if only gradually, about financial concepts such as the stock market, Roth IRAs and high-yield savings accounts. With your guidance, they can direct their earnings toward long-term investments, short-term expenditures or even growing their preliminary income early one, whether through developing their own earnings strategy or investing in their futures. You can even opt to treat their savings like an early 401(k): Tell your kids you'll match every dollar they stick in their savings, and consider throwing in a bonus or two if they meet certain savings thresholds.
If they haven't already, your children will experience the financial milestones of youth: their first debit card and credit card (or becoming an authorized user on one of your cards), first solo shopping trip and, if they opt to pursue higher education, dealing with college expenses and possibly student loans. With your guiding hand, they can mature with financial confidence and knowledge.