One of my kids started college last year. Even before he went to college, during his busy senior year in High School, the boy found a cashier job with Sprouts Farmer’s Market. In his first semester in college, he started to work in Central Market, also as a cashier.
I told him not to work. Instead, he should focus on studying and his scholarship depends on his grades. If he drops below “B” average, he may lose his ten thousands of dollars in scholarship. No part time job as a cashier in the world could make up for the loss.
In the mean time, his grades suffered.
Well, the boy just has to learn his lesson the hard way. I am just a middle-aged father, what do I know?
One side effect is that he actually made about $6,100 gross income, divided among two W-2 forms, above the $5,950 line that mandate an dependent to file tax return. \
He employers have been very lenient towards him, for all in all, he paid $41 in federal income tax. Of course, that is after Social Security and Medicare withholding.
So I helped him file tax return for the first time in his life. He is getting all of the $41 back. The check has been in my in-box for two weeks now for he does not come home very often.
In all seriousness, the best thing to do with his money is probably open an IRA account and put $5,500 into the account as 2013 contribution.
We were talking about starting investing at young age and let compound growth propel you to become a millionaire. Very few of us started to invest when we were just born, but never to late to start.
Last time I checked, there is no minimum age to set up an IRA account, as long as one can show he/she held a real job and made real money. Kids could make money by sweeping floor, watering plants, or walking dog, but those jobs are kind of hard to keep good records for.
But as soon as one made money that comes with a W-2 form, he/she should seriously think about opening IRA.
As a parent, I like the idea that my kid locks his money away in an IRA account. It will help keeping him away from many kinds of trouble.