Your Kids Can Work

My first paying job, believe it or not, was as an Avon Lady. Long before my mother would allow me to wear makeup, she let me take over the sales territory for the retiring professional who sold cosmetics to the fashionable ladies in our apartment complex. Thinking back, it was a perfect solution for me—it taught me a lot about money, marketing, and interpersonal skills. (As a shy child, talking to people was tantamount to jumping off a cliff.) It kept my mind off the difficulties of growing up in a divorced home, and we needed the money. By the time I was 12 years old, I was buying most of my own clothes and school supplies, and was on my way to saving for a big college tab. The wonderful ladies of the Thimble Isle Apartments took me as seriously as they would someone who actually knew how to put on mascara. I still love them for it.

It was good for me and great for my mom. Will it be a positive experience for your family? Most folks report that there is nothing but good news when kids take on responsibilities for which they will be paid. Professional development, people skills, personal confidence, and an appreciation of what it takes to earn money are just some of the benefits, but there are also some financial advantages to encouraging an entrepreneurial child that may benefit the entire family unit. (As usual, that means taxes.)

Crunching the Numbers

For kids who work, wages up to $5,350 are free from federal income taxes (as of 2008). This is very nice. Here's something even nicer—if you hire your children to do either domestic work (like cleaning or babysitting) or to work in an established small business, you don't have to withhold Social Security or Medicare taxes on their wages. Don't think that's a coup? Ask former Attorney General nominees Zoe Baird and Kimba Woods how they feel about it. Both talented women came under fire for failing to pay Social Security taxes for their domestic help, who happened to be undocumented immigrants. If only they had adopted them first. (Actually, this exemption applies to kids under 21 who work around the house, and kids under 18 if they work in a family business.) Sock away the savings on taxes into an investment account for you or your kids. A disciplined approach can take the sting out of the expensive prospect of feeding and educating your children.