How to Get Money as a Kid: Ways to Start Earning

Earning money as a child offers valuable lessons in financial responsibility and the satisfaction of achieving monetary goals. It provides a foundational understanding of how work translates into earnings, fostering a sense of independence. Learning to manage one’s own money, whether through saving for a desired item or contributing to household expenses, builds practical skills. This early experience in earning can lay the groundwork for sound financial habits that will last a lifetime.

Earning through household responsibilities

Many children begin earning by taking on responsibilities within their own home. This often involves a structured allowance system, either a fixed amount or tied to specific chores. A fixed allowance provides predictable income, while a chore-based system links effort to reward. Clear agreements between children and parents regarding tasks and payment are important for this system to work effectively.

Age-appropriate tasks include keeping their room tidy, assisting with meal preparation, or helping with dishes. Other compensated contributions involve taking out the trash, helping with laundry, or caring for family pets like feeding or walking. These duties teach consistency, contribute to the family unit, and provide a sense of accomplishment. Parents might structure payments weekly or bi-weekly, similar to a regular paycheck, to help children understand earning cycles.

While income earned by children is subject to the same tax rules as adults, allowances for household chores are viewed differently by the Internal Revenue Service (IRS). These arrangements are considered gifts or family support rather than formal employment. Consequently, children usually do not owe income tax or self-employment tax on typical allowances for helping around the house. However, maintaining clear boundaries between household duties and formal employment, especially if a parent operates a business from home, avoids potential tax complexities.

Earning through neighborhood services

Beyond the home, children can earn money by offering services to neighbors. These jobs provide practical experience in client interaction and reliability. Common tasks include babysitting, pet sitting, or regular dog walking. For these roles, parental involvement is important to ensure safety, establish appropriate rates, and arrange transportation if needed.

Other popular neighborhood services involve yard work, such as raking leaves or shoveling snow. Washing cars, watering plants while residents are away, or running small errands for elderly neighbors also present earning avenues. Children can advertise their availability through simple flyers or by speaking with neighbors. Clear communication about expectations and pricing helps establish a professional approach to these early business ventures.

Income from providing services to others is considered taxable self-employment income by the IRS. If a child’s net earnings from self-employment reach $400 in a tax year, they may be required to pay self-employment taxes for Social Security and Medicare. If their gross income from all sources, including neighborhood services, exceeds the standard deduction for a dependent, they would need to file an income tax return, generally Form 1040. Parents should guide their children in keeping simple records of income and any related expenses, such as supplies or transportation, as these expenses can reduce taxable income.

Earning through creative ventures and sales

Children can tap into their creativity and entrepreneurial spirit by creating and selling goods or items they no longer need. This approach fosters innovation and an understanding of supply and demand. Crafting items like handmade cards, friendship bracelets, or drawings can be a fulfilling way to earn money. Baking treats such as cookies or cupcakes for local sales can also attract customers.

Setting up a traditional lemonade stand is a classic creative venture, allowing children to manage a small business from production to sales. Another method involves selling old toys, books, or clothes in good condition. These items can be sold at a family yard sale or, with parental supervision, through online marketplaces. This teaches the value of decluttering and gives items a second life while generating income.

Any income from selling goods, whether handmade crafts or used items, is considered taxable income. For items sold at a yard sale, if the selling price is less than what was originally paid, no taxable gain occurs. However, if items are sold for more than their original cost, such as a rare collectible, any profit could be a capital gain subject to tax. If a child’s net earnings from these sales activities meet the self-employment tax threshold, or their gross income exceeds the dependent standard deduction, they may have tax filing obligations. Parents should assist their children in tracking income and any related business expenses, such as materials for crafts or ingredients for baked goods, to accurately determine taxable earnings.