Money tips for teens with summer jobs

Each year, thousands of Canadian teenagers get part-time or summer jobs for the first time. Maybe yours is among them ? if so, he or she is really beginning to learn what it means to earn a living. You can help your teen make a successful transition into the ?real? world of managing their own finances by passing along these money tips:

Money education pays off ? The way your teen handles money as an adult will depend largely on the habits he or she learned growing up. By educating your kids about money and motivating them to become regular savers and investors, they?ll keep more of the money they earn, do more with the money they spend, and develop the skills and knowledge they need for financial stability and growth in the years ahead.

Money management pays off ? Explain the value of effective income management beginning with the cardinal rule of always controlling expenses so that the expenses don?t exceed income. Help your teen create a budget by projecting their income and expenses over a 12-month period. Be sure their budget goals are measurable and attainable.

Start filing a tax return right away ? As soon as your teen has a job that results in a T4 (a Statement of Remuneration Paid information slip issued by an employer), he or she should begin filing their own income tax return. Even if their income is below taxable levels they will start accumulating RSP contribution room, which can be carried forward indefinitely. When your teen reaches age 19, he or she should also apply for the GST/HST credit on each year?s tax return. Based on their net income, they will likely be eligible to receive quarterly GST/HST credit cheques.

Spend today with an eye to tomorrow ? Hyper-marketing and peer pressure often lead to a ?gotta have it? mentality that causes teens to overspend. Make your teen aware of the importance of spending money while thinking about their future as well as their present.

Save today for a richer tomorrow ? Encourage your teen to develop the habit of saving at least 10% of their take-home pay. Show them how saving as early as possible takes advantage of the miracle of compound interest. Here?s a dramatic example you can use: Invest $1 a day for 40 years at an interest rate of 5% and you?ll have about $44,000!

Your teen isn?t likely to have much ?extra? money left over from a lower-paying part-time or summer job but if they do, contributing to a Registered Retirement Savings Plan (RRSP) can be a wise choice. Early RRSP contributions can hasten the day their retirement dreams become a reality.

It?s important to teach your teen about the value of money and money management, about investing and how it can affect their future financial comfort ? and if you need help, give your financial advisor a call. A professional viewpoint can add weight to your advice.

*The rate of return is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values or returns on investment.

This column, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. Insurance products and services distributed through I.G. Insurance Services Inc. (Insurance license sponsored by The Great-West Life Assurance Company.) For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant