How to Make Money as a Teenager and Manage It

Teenagers in the United States have numerous opportunities to earn money and gain valuable financial independence. Engaging in paid work at a young age provides practical experience, helps develop important life skills, and allows individuals to save for personal goals. Understanding the various avenues for earning and the responsibilities that come with managing money can set a strong foundation for future financial success.

Earning Opportunities for Teenagers

Teenagers can find various ways to earn income, ranging from traditional employment to self-started ventures. Many entry-level positions are suitable for young workers seeking to gain experience and generate earnings.

Traditional part-time jobs are a common starting point for many teenagers. Retail establishments, such as clothing stores or grocery stores, frequently hire young people for roles like sales associates, stock clerks, or cashiers. Food service is another significant sector, offering positions such as hosts, bussers, dishwashers, or baristas in restaurants and coffee shops. These roles often accommodate school schedules.

Beyond traditional employment, the freelance and gig economy offers flexible earning opportunities. Babysitting and pet sitting are popular choices, allowing teenagers to work independently and set their own hours. Dog walking and lawn care, including tasks like mowing and snow shoveling, are also common services that can be advertised within neighborhoods.

Tutoring provides another flexible option for teenagers with strong academic skills in specific subjects. Students can offer their services to younger children or peers who need assistance with homework or test preparation. Other neighborhood services like car washing, house cleaning, or running errands for busy individuals also present viable income streams.

Online earning methods have expanded possibilities for teenagers, though parental guidance is often advised. Participating in online surveys is one such method, with platforms like Swagbucks and Survey Junkie allowing users as young as 13, often with parental consent. These sites pay users for sharing opinions on various products and services.

Content creation on platforms like YouTube or TikTok can also generate income through advertising revenue or sponsorships. Selling items online, whether old clothes, handmade crafts, or digital products like graphic designs, is another growing area. Platforms like Etsy permit minors between 13 and 18 to sell through a parent-registered account, ensuring an adult is responsible for financial information and account activity.

Entrepreneurial ventures allow teenagers to develop business skills from a young age. Starting a small business, such as selling homemade baked goods or crafted items, can begin with minimal overhead. Designing and selling print-on-demand merchandise like custom t-shirts or stickers also presents a low-risk entry into product sales.

Understanding Legal and Age Restrictions

Youth employment in the United States is subject to specific regulations designed to protect young workers. The Fair Labor Standards Act (FLSA) establishes federal standards for minimum wage, overtime pay, and child labor. These rules vary depending on the minor’s age and the type of work performed, with state laws sometimes imposing stricter requirements.

The FLSA generally sets 14 years old as the minimum age for non-agricultural employment. For 14- and 15-year-olds, there are limitations on working hours. During school weeks, they may work up to 3 hours on a school day and a maximum of 18 hours per week. On non-school days, they can work up to 8 hours, with a weekly maximum of 40 hours during non-school weeks, such as summer breaks. Work is generally prohibited before 7 a.m. or after 7 p.m., except between June 1 and Labor Day when the evening hour extends to 9 p.m.

Work permits or employment certificates are often required for minors, though federal law does not mandate them. Many states have their own requirements for these documents, which verify a minor’s age and eligibility for employment. Obtaining a work permit typically involves the minor, parents or guardians, the employer, and school officials or the state’s labor department.

Certain occupations are deemed hazardous and are prohibited for minors under federal law. These Hazardous Occupations Orders (HOs) apply to individuals under 18 years of age and include jobs involving explosives, driving motor vehicles, operating power-driven machinery like woodworking or meat-processing machines, and work in mining, logging, or roofing. These restrictions are in place to prevent injuries and promote safety for young workers.

Teenagers earning income also have tax obligations. If a teenager’s earned income exceeds certain thresholds, they may be required to file a federal income tax return. Employers typically require new employees to complete a Form W-4. Investment income earned by a minor, such as from a custodial account, may also be subject to specific tax rules, commonly referred to as the “kiddie tax.” Teenagers and their parents should understand these requirements and consider consulting IRS guidelines or a tax professional if income levels are nearing filing thresholds.

Smart Money Management for Teens

Budgeting forms the foundation of responsible financial habits, providing a clear picture of income and expenses. This involves identifying all sources of money, such as paychecks or allowances, and then tracking where that money is spent.

A common budgeting guideline is the 50/30/20 rule, which suggests allocating 50% of income to needs, 30% to wants, and 20% to savings. Teenagers can adjust these percentages based on their personal financial situation, as their needs might be fewer than those of adults. Regularly reviewing and adjusting the budget helps ensure it remains effective and aligned with financial goals.

Saving for specific goals provides motivation and teaches the benefits of delayed gratification. Teenagers can set both short-term goals, such as saving for a new phone or concert tickets, and long-term goals, like contributing towards college expenses or a car. Allocating a portion of each paycheck or allowance directly to savings helps build this habit consistently.

Understanding the difference between needs and wants is another important aspect of financial literacy. Needs are essential for living, such as food, basic clothing, and school supplies, while wants are discretionary items that enhance life but are not strictly necessary, like entertainment or designer clothing. Prioritizing needs over wants helps in making informed spending decisions.

For those looking to grow their money over time, understanding compound interest can be beneficial. Compound interest means earning interest on the initial amount saved or invested, plus on accumulated interest from previous periods. This demonstrates how money can grow exponentially over time, making early saving and investing advantageous for teenagers due to the longer time horizon.

Investment accounts suitable for minors typically include custodial accounts, such as Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts. These accounts are managed by an adult, known as the custodian, until the minor reaches the age of majority, which varies by state, typically 18 or 21. Any withdrawals from a custodial account must be used for the minor’s benefit.