Finding ways for kids to make money shouldn’t be too hard if you get creative. If your kid is old enough based on the laws in your state, they could get a part-time or full-time job.
Some states allow teenagers to work as early as 14 with limited hours or with a work permit. Other states have no restrictions.
Kids can work at the grocery store, gas station, fast food restaurant, or any other job that hires entry-level positions with flexible schedules.
Working a traditional part-time job isn’t the only way to make money as a kid. If your kids are like I was, your kid can start their own business.
When I was growing up I had a pet sitting business, a lawn mowing business, and a trading card game reselling business. Technically, none of them were official businesses, but I felt like they were businesses and I earned money.
Here’s a list of 13 ways to make money as a kid.
- Apply for a real job if they’re old enough
- Work in a parent’s business
- Make something to sell locally or online (crafts, homemade baked goods, etc)
- Become a pet sitter in your neighborhood
- Start babysitting younger kids
- Offer simple handyman services
- Start a landscaping company
- Wash or detail cars, boats, or RVs
- Organize a yard sale and arrange a commission
- Shop at yard sales then resell items at higher prices
- Offer a snow clearing service
- Ask neighbors what chores they need taken care of
- Buy items in bulk and sell at a profit
Related: ChooseFI’s Favorite Side Hustles
Organize Your Child’s Income
It’s important to track your child’s income as they begin their first job or side hustle. Thankfully, tracking your child’s income is easy with the right system.
Opening any of the following online checking or savings accounts in your child’s name is an easy way to organize their finances. Plus, this is an excellent way to teach them the value of saving money and tracking personal finances.
Radius Rewards Checking Account
The Radius Rewards Checking account is a robust online banking option that is great for first-time savers.
Opening an account with Radius is free and straightforward. Rewards checking accounts of $2,500 or more earn 1.00% cash back on debit purchases. There is no limit to how much cash back you can earn, so this account is perfect for your child’s spending needs.
Plus, Radius offers free worldwide ATM withdrawal access, carries no fees on active accounts, and only requires an initial deposit of $100 to get started.
Read our Radius Bank Review to learn more about this powerful online checking account.
Axos Bank Rewards Checking
Axos Bank is another reliable option for organizing your child’s income and savings. Axos Bank Rewards Checking account holders can earn up to 1.25% APY while accessing Axos’ suite of digital money management tools.
Like Radius, this checking account is fee-free. Account holders can also withdraw money from any domestic ATM for free, and there is no account minimum to open an account.
CIT Savings Builder
The CIT Savings Builder is an online high-interest savings account that is perfect for young savers looking to earn meaningful interest on their account balance.
This savings account offers an immensely competitive interest rate of 1.25% APY. To qualify, account holders must have a minimum balance of $25,000 or setup an automatic monthly deposit of $100.
The $25,000 threshold is likely out of reach for most children. However, if your child has a part-time job, setting up $100 deposits is a realistic way to encourage them to save while earning a high interest rate.
Checkout our CIT Bank Review to get all the details on this awesome savings account.
Related: 7 Of The Best Personal Finance Tools To Help You Control Your Money
What Kids Can Do For You If You Own A Business
If you’re a business owner, you are in a unique position to help your children earn money. While traditional employers may not allow your children to work until they are teenagers, you may have tasks your children can complete and get paid for. That said, you shouldn’t just “hire” your children and pay them if they don’t do any work.
Any work you hire your children to do should be tracked and noted. You need to pay them a competitive wage for what they do, too. For instance, if you typically pay $5 to purchase a stock photo for your website, you could instead pay your child $5 for their pictures. That said, you probably shouldn’t pay your kid $500 for an awful picture. You’d likely be pushing it if you ever get audited.
To get an idea of what works and what wouldn’t, you should get in touch with a tax professional that can evaluate your business and situation. They should be able to make a recommendation based on your particular circumstances.
How Kids Can Start Their Financial Independence Journey Early
So why is earning money as a kid so important? First, kids probably won’t be earning a ton of income. That means the income they do earn could be tax-free. If it isn’t tax-free, it should at least be taxed at a relatively low tax rate.
Earned income should also allow most children to open and contribute to retirement accounts like Roth IRAs. A Roth account is ideal in many cases due to a child’s relatively low-income tax rates.
The money will grow and can eventually be withdrawn tax-free in retirement. If your kid is under ten, they could leave that money alone and benefit from the power of compounding for 50 years or longer. Using 8% returns and the Rule of 72, your money would double over 5.5x over 50 years.
In addition to the potentially huge tax benefits and long-term benefits of compounding, this also helps develop good habits. Most people don’t learn to start saving until much later in life. If you can build the habit of saving early, you’ll be setting your children up for a lifetime of financial success.
Related: How To Open A Roth IRA For Kids And Teach Your Kid About FI
Your Child May Need To File A Tax Return
Regardless of whether your child plans to invest or not, earning income means they may need to fill out a tax return. If your child works a job and has federal income tax withheld from their paycheck, they may need to file to claim a refund.
If your child runs a business, they’ll need to report their earnings as well as pay any applicable federal income tax and any applicable self-employment tax. Since you need earned income to contribute to a retirement account, it’s important to report this income and pay the applicable taxes to unlock the tax benefits of a Roth IRA.
Learning how to make money as a kid may be fun. It can also be an important lesson on how to save and how our tax system works. Make sure your kids understand the whole process to help better prepare them for life after they move out.
Related: Best Places To Get Your Taxes Done!