Over the next few weeks thousands of high school students will enter the workforce for the first time, taking up summer jobs over the busy holiday period. It’s a great stepping stone towards adulthood, and parents can play a valuable role, helping kids master some of the basics that go hand in hand with a vacation job.
The first step is to organise a tax file number (TFN). Secondary students can apply for a TFN through their school as part of the secondary schools tax file number program. It’s the easiest way to get a TFN as kids don’t have to provide proof of identity other than their Australian birth certificate, citizenship certificate or passport.
If your son or daughter waits until school holidays to apply for a TFN, they need to go through the Tax Office. Application forms can be picked up from some newsagents or phone the Tax Office on 1300 720 092 to order a form. The Tax Office website has more information. Visit www.ato.gov.au, click on ‘Individuals’ and select ‘Get a tax file number’ from the dropdown menu.
If they don’t already have one, your child will need to open a bank account into which their wages can be deposited. Many financial institutions offer special student accounts that charge no regular account-keeping fees, so be sure to enquire about this at your local bank branch.
If your child is under 18 and works at least thirty hours a week, they may be entitled to employer-paid compulsory super contributions. Unless your child opts for their employer’s default fund, you’ll also need to help your son or daughter choose a super fund.
This is an area where parents can offer plenty of guidance, explaining how super works and the role it plays in personal wealth. Sites like Selecting Super can be useful when it comes to choosing a fund.
Whether they choose their own fund or go with an employer’s fund, make sure your kids keep track of their super account. When they move jobs remind then to give their new employer details of their super fund.
When kids first enter the workforce, the money they earn from a casual or part-time job may seem like a fortune, and the temptation to spend the lot can be overwhelming.
Opening an online savings account can make it easy for kids to transfer part of their wages into an interest bearing account. This is a vital step in establishing a habit of regular saving that could stay with your teenager for life.
Back it up by helping your child draft a personal budget allocating part of their wages to spending while the rest is earmarked for saving. Sites like www.ratecity.com.au show a range of high interest accounts available to teens. Many offer bonus interest if your son or daughter makes regular deposits without any withdrawals.
If your child shows an interest in personal finance the government’s FIDO website has a section devoted to young people and money. Visit www.fido.gov.au and select ‘Young adults’ from the ‘About You’ section.