The notion of school summer vacations often evokes thoughts of leisurely days at the beach or enjoying time with friends. However, for numerous high school and college students, the reality is that these summer months are dedicated to work. This period of employment presents a valuable opportunity for teenagers and young adults to acquire essential financial skills that can have a lasting impact throughout their lives. These jobs can also serve as the basis for learning how to navigate the working world and build effective networks.
You’ve started or are about to start your new summer job. Congratulations! Now, what are some financial considerations?
Compensation and Taxes
Understand the terms of your compensation, such as hourly wages, salary, tips or stipend. Clarify when and how you will be paid and determine whether you will owe any taxes on your earnings from the summer job or internship. Depending on your income and where you’re working, you may need to set aside a portion of your earnings to cover tax obligations. Familiarize yourself with tax laws and consult with a tax professional if necessary.
Ask if your employer extends any benefits to part-time employees, such as the option to participate in a 401(k) plan, access to health insurance coverage, or potential reimbursement for travel expenses.
If you’re pursuing an unpaid internship, make sure you have a plan for covering basic living expenses like housing, transportation, food, etc. Look into money-saving options like finding a summer sublet, utilizing public transit, and cooking meals instead of eating out frequently. There are often scholarships, grants, or endowment funds available specifically to help students afford unpaid internships. Check with your university’s career services department for these opportunities.
Savings and financial goals
Use your summer job or internship as an opportunity to save money and work towards your financial goals. Learn how to budget using an app such as PocketGuard, YNAB or Empower. Set aside a portion of your earnings for savings, whether it’s for future education expenses, emergencies, travel, or long-term financial objectives. Having specific financial goals will help you prioritize saving and make informed decisions about your finances.
- Consider opening a Roth IRA. In 2024, the maximum Roth IRA contribution is $7,000 for those under age 50.
- Explore contributing to low-risk and low-cost investment options like mutual funds or index funds.
Building or improving your credit history
If you don’t have a credit history, consider applying for a credit card and using it responsibly. Make timely payments and keep your credit utilization low. Building a positive credit history early on will be beneficial when you need to apply for loans or credit in the future.
Student loans and financial aid
If you have student loans or are receiving financial aid, understand how your summer earnings may impact them. Some scholarships or financial aid packages have specific requirements or limitations on outside income. Be aware of any implications and communicate with your financial aid office or scholarship providers, if applicable.
Professional development and networking
While not directly financial considerations, these are important aspects of your summer job or internship. Take advantage of opportunities to enhance your skills and network with professionals in your field. Building relationships and acquiring new knowledge can contribute to future career growth and potential financial opportunities.
- Update your LinkedIn profile with your new job and responsibilities.
- Connect on LinkedIn with colleagues, clients, vendors, and other professionals that you meet during the summer; schedule informational interviews or informal coffee breaks with colleagues and other professionals in your field of interest; and attend company and industry events – to continue building your professional network.
- Throughout the summer, periodically write down/record what you’ve been working on (while the duties are still fresh in your mind) so you can easily update your resume when the time comes.
- Foster relationships with your coworkers or find a mentor that you can reach out to if you need career advice in the future. These individuals could also be used as references (with their permission, of course) when applying for future jobs.
Treat the internship as an opportunity
Your summer job or internship might not live up to every expectation but treat the experience as a learning opportunity and focus on the positives. Always remain professional, and come to work each day with an enthusiastic, eager-to-learn attitude. Seek feedback on your performance to better understand your strengths and be open to constructive criticism to identify areas for improvement. Show your appreciation for the opportunity by sending a personal note to your colleagues at the end of your internship or job. You never know who might provide a great referral or reference in the future.
By being financially prepared and prioritizing networking from day one, you’ll be able to maximize the value of your summer internship experience. With some upfront planning, you can set yourself up for success this summer and bright career opportunities down the road.