Every summer the youth labor force grows by more than 2 million, according to the U.S. Bureau of Labor Statistics. With school out, students are looking to make some cash in their free time and graduates are entering the workforce, eager to launch their careers. Gen Z has one thing on their side, and that’s time. Now is the perfect time to teach them smart money habits.
Studies show only 23% of Gen Z knows basic financial literacy. This includes budgeting, saving, credit and debit, banking basics and more. They’d prefer spending money on wants like travel and concerts than on essentials like rent and groceries. So, while they earn money this summer, it’s the ideal moment to help them build a strong financial foundation that will serve them for years.
Finding a job is the first step. As Floridians, our beach towns are especially popular in the summer, drawing many to restaurants and golf courses. High school and college students can capitalize on roles like host, server, bartender assistant, cart attendant, pro shop staff or grounds crew. Beaches and pools are looking for lifeguards and swim coaches. Lawn care and landscaping jobs are also good choices. Lastly, teens can apply to work in retail where most stores are always in need of extra hands.
Once those paychecks start coming in, it’s important for parents to step in and help teens manage their money. Without proper budgeting skills, those funds can disappear as quickly as they were earned. A good first step is to open a student savings account specifically designated for summer income.
With a separate savings account comes lessons on budgeting. For teens earning their first paychecks, a simple approach could be saving 50%, spending 40% on things they enjoy now and setting aside 10% to give to charity — or start learning about investing.
Emphasize goal setting. Short-term goals look like a new phone or a concert. Long-term goals involve more complicated purchases like a car or college tuition. Simply having spending money once school is back in session can be a motivator for teens. The bottom line of every goal though is to save. Find what motivates your child and build off of that.
Should you get your teen started with a credit card? If used responsibly, a credit card can help a teen build a credit history. However, set an initial low spending limit to prevent them from overextending themselves. If you’re worried about accumulating debt, open a debit card for your teen instead. Debit cards give your teen, and you, immediate control over their spending.
As college graduates step into adulthood and begin their careers, it’s important to understand the difference between seasonal work and long-term employment. Studies show only 20% of Gen Z is currently saving for retirement, despite this being the most crucial time to start because of the power of compound interest. Take time to explain to your teen how retirement plans work and encourage them to contribute, even if it's just 1% of their salary. Skipping retirement savings is one of the most common mistakes Gen Z workers make.
You can also help prep your college grad by ensuring they are contributing to an emergency fund, prioritizing student loan repayments (if applicable) and creating a post-college budget that accounts for rent, transportation and groceries.
Summer presents an ideal opportunity for both high school students and college graduates to not only earn money but also to learn valuable financial lessons. Parents and mentors have a critical role in guiding Gen Z to develop responsible money habits, making sure they balance immediate enjoyment with long-term financial security. By helping them navigate these issues, we can set them up for a lifetime of financial success.
