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A Few Extra Bucks

Mike Zaccardi, 12:22 pm ET

MY FIRST JOB DURING high school was bagging groceries at Publix Super Markets. The starting wage was a cool $7 per hour in 2004. That was big money to me. It meant I could work the weekends and a few nights a week, and then buy music CDs on eBay. My 2005 goal was to earn enough to fund a Roth IRA at Vanguard Group.

Today’s teenagers have it better. Don’t take my word for it: The latest wage growth tracker, courtesy of the Atlanta Federal Reserve, shows hourly earnings for the age 16-to-24 group are up a whopping 9.5% from August a year ago. That’s the fastest clip since 2001.

All the chatter about raising the minimum wage to $15 an hour is perhaps having its effect on the private sector. Also contributing to higher pay is the ongoing labor shortage in the service sector. Restaurants, hotels and other manual labor businesses all need more workers.

This may be the best time to be a high school kid hungry for some extra bucks. College students are also licking their chops at an emerging perk—free tuition. Amazon and Walmart recently announced they’ll pay for frontline workers’ college costs. These are very encouraging signs.

Parents can make it even sweeter. Here’s a strategy: For every dollar your child earns, match it with a Roth IRA contribution. By opening and funding Roth IRAs for your children, you set them up for success. You incentivize them to work hard, and also encourage them to become investors as they watch their accounts grow.

The pandemic upset many people’s plans. But I’m optimistic about Gen Z and Generation Alpha—the group that apparently comes after Gen Z. Higher pay is here, and hopefully a smaller student-debt burden is on its way.

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Newsboy
Newsboy
9 months ago

Morning newspaper carrier at from age 11-18, and a soda jerk in an ice cream parlor beginning at 16 (my first real W-2 gig).

The paper route exposed me to those who were likely “balance sheet” wealthy but fiscally frugal (yet they still managed to tip their paperboy well each week and at Christmas), as well as those who were only “W-2 wealthy” (but rarely tipped on collection day, or at all on Christmas).

The ice cream parlor job exposed me to parents who could not say no to their kids (and kids who had little appreciation for the value of a dollar).

Both jobs gave me valuable insights on the importance of modeling the virtue of financial restraint with my own kids, as well as over-tipping those who provide personal services our family relies on.

Mike Zaccardi
Mike Zaccardi
9 months ago
Reply to  Newsboy

Those are very cool insights from your jobs. I found some similar characteristics from grocery store regular shoppers. I always tried to engage financial folks in discussions. I treated it like a game.

R Quinn
R Quinn
9 months ago

My first job in high school was working in a pet shop two hours after school and all day Saturday for $5.00 a week and the occasional free tropical fish. My first real job out of high school was a union job as a mail boy in a Fortune 500 company at $1.49 an hour.

I played with penny stocks and hot tips with what little I had or a better way to say it is they played with me.

Mike Zaccardi
Mike Zaccardi
9 months ago
Reply to  R Quinn

A free fish is one of the more unique benefits I’ve heard! Love it.

Andrew Forsythe
Andrew Forsythe
9 months ago

Great article, Mike. My first job in high school was likewise bagging groceries, but I think the pay was more like $1.50 an hour (it was 1968). Unlike you, investing was the furthest thing from my mind in those days. I wish I’d seen it differently—the compounding on a small sum for 53 years would’ve been most gratifying.

Mike Zaccardi
Mike Zaccardi
9 months ago

Thanks, Andrew! It was surely a lot harder to get invested with small sums in those days though. Of course, you could’ve bought a Hershey’s bar for a nickel too!

David Petersen
David Petersen
9 months ago

My 15 year old has a job making $15 an hour in California. It blows my mind. After watching him blow his money on video games and food I started a new policy. 10% to give ( We did this previously) 25% college and 25% in a Vanguard Roth IRA. The rest is his as fun money. He wasn’t happy with the changes but future him will appreciate it.

Mike Zaccardi
Mike Zaccardi
9 months ago
Reply to  David Petersen

I envision a lucrative future for that young man. Instilling those habits now could be quite valuable. I remember helping a friend set up $50/mo into a T Rowe Roth IRA in 2007. He still has it. I’m curious what the balance is.

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