Kids are quick to learn that money doesn’t grow on trees. According to Cambridge University research, by the time we’re aged seven, we can grasp the concept of getting money in exchange for work[1]. While some parents expect their kids to put this into practice asap, by doing chores for pocket money, others are happy to make helping around the house an act of citizenship instead. In either case, there’s definitely an argument for the importance of pocket money as an early teaching tool for key financial habits, like delaying gratification and opportunity cost.

So if these lessons are something that can be taught in the home, where’s the educational benefit in getting a job? Emma Spencer, child clinical psychologist and contributor to the How to talk money with children e-book, emphasises the life lessons to be gained by getting a job during the teen years. “A part-time job is a fantastic skills-builder,” says Emma. “If you think they’re ready, then encourage them to start working. There’s so much to be learnt from a part-time job aside from money. Building connections, learning responsibility, customer service skills and manners are important stepping stones to adulthood.”

How many teens are working?

According to survey results from our Share the Dream report on how and what kids are learning about money, 44% of 14-18 year olds are currently working for money outside of the home. For kids from households with a gross annual income of more than $104,000, that proportion rises quite significantly to 59%. Of kids in this age group who work part-time, almost half of them (44%) have had their job since before the age of 16[2].

The impact on spending

As well as giving a reasonable idea of how likely Australian teens are to be in the workforce during the high school years, the report also shows a strong correlation between having an income from work and spending. The comparison between spending patterns for working and non-working teens shows very different levels of experience with digital transactions. If you have a part-time job, you’re about twice as likely to be spending with a debit or credit card and making purchases with a mobile, compared with your non-working peers. We can’t necessarily assume that this means working teens are getting to grips with controlling their spending through these channels. In fact, it could be quite the reverse, with the extra money giving them a taste for retail therapy!

However, the greater likelihood of working teens transacting digitally does at least introduce the possibility of learning from these experiences. And parents can give a helping hand, by reinforcing some traditional money lessons in this new cashless context. Here are tips from two CERTIFIED FINANCIAL PLANNER® Professionals on how they’ve taught their kids to save and be mindful when spending:

“Always save one third of your earnings to reward your future self, and encourage living within your means using the other two thirds. The earlier your teens start saving the more interest they’ll earn, which can accumulate over time.”
Fran Hughes, CFP®

“I encourage my teenage daughter to think of things she wants to buy in terms of how long it would take her to earn the money for them. I pay her $10 per hour to help me in the office. So for a $150 pair of shoes, she realised that she would have to work for 15 hours, or two days.”
Tracy Sofra, CFP®

Taking financial literacy next level

Two advanced financial concepts that working teens are far more likely to be interested in are tax and superannuation. 16% of young adults with a part-time job want to know more about these matters, compared with just 6% of non-working teens (tax) and 3% for super. Of course it makes sense that when you see tax deductions and super contributions on your pay slip, you’re going to be curious about this part of your income. With many young people still largely unware of what super is all about and how to make the most of it, the sooner they start taking an interest, the better.

It’s particularly important for young adults working part-time to be aware that they may receive super under current Super Guarantee legislation. With our ageing population, there’s potential for our working lives to become longer in the future. So even though our teens may be 50 odd years away from retirement, it’s vital for people of any age to be aware of their right to be paid the super they’re entitled to.

Download our free eBook now for ideas and activities to help kids grasp the value of money in a digital world.

[1] Money Advice Service Press Release, New Study Confirms, Money Habits Are Set By The Age Of Seven Years Old, 23 May 2013, https://mascdn.azureedge.net/cms/habits-set-by-age-seven-pr-220513-final.pdf

[2] Share the Dream report, page 13