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By Erin Lowry, contributor
Deciding whether or not to give a teenager an allowance may be a bit of a controversial topic among parents, but for these five reasons, most would agree that it’s good for a teen to hold down a job.
1. Learn How to Budget
Encouraging teens to hold down a job during high school and start paying for some of their own expenses can help them build budgeting skills. Dinners out with friends, trips to the movies and gas for a car can be covered with their own hard-earned dollars. Allowances can be factored into the budget or phased out in order to teach a teen how to curb impulse purchases and balance a budget before striking out on his or her own.
2. Put Money Toward College
Some parents want to pay for college in full, some parents can’t afford to, and others believe their children need a financial stake in their education. No matter which camp you fall in, encourage your teen to get a job in high school to help save for college. Even if you do plan to pay for tuition and living expenses, your teen will then have money for the social experience of college or the means to keep building a healthy nest egg for life after graduation.
3. Get Work Experience
Colleges and future employers like to see work experience on a resume. Holding down a job in high school is a balancing act that teaches discipline and time management skills — on top of skills that will be learned on the job.
4. Start Saving for Retirement
It’s never too early to start saving for the future and taking advantage of compound interest. Teens can actually begin prepping for retirement by opening an IRA (Roth or traditional) with the money from their high school jobs, as long as their income is taxed. It’s beneficial to get a teen in the habit of saving for retirement in high school so it will be second nature later in life.
5. Appreciate the Value of a Dollar
Parents often complain that teens just think money grows on trees and don’t appreciate the value of a dollar. Nothing makes a teen appreciate the money quite like needing to work for it — and not just by doing chores around the house. Dealing with customer complaints, standing on their feet for long hours, and turning down going out with friends in order to work will all make a paycheck much more valuable than allowance.
Erin Lowry is the founder of BrokeMillennial.com, where she uses sarcasm and humor to explain basic financial concepts to her fellow millennials. Erin lives in New York City and works for MagnifyMoney