5 things new earners need to know for financial fitness.

School’s out and many teens have just started their first job. In addition to on-the-job learning, new workers get opportunities to learn about money management. If you’re among the thousands of teens who’ve recently started a new job, we offer congratulations and encouragement. Specifically, we encourage you to do two things. First, learn as much as you can about personal finances. Second, develop good habits that will set you up for life-long financial fitness. Here are five things to help you get started.

The reality of taxes

One of the first things you discover when you start working is that take-home pay is less than your wages. This is because of taxes. In addition to state and federal income taxes, your check will reflect withholdings for FICA. FICA stands for the Federal Insurance Contributions Act and these funds go toward Social Security and Medicare; you pay half of FICA taxes, and your employer pays half.

While retirement is decades away and we hope you never need Social Security disability payments, your FICA contributions are counted toward your eligibility to receive Social Security benefits. You need a minimum of 40 credits (4 credits can be earned each year) to get retirement payments, so you’re already setting yourself up for a better financial future.

Also, many teens have relatively low-paying jobs that make them eligible for a refund of some, or all, of their state and federal income taxes. To get a refund your income must be below a certain threshold (the income threshold changes each year) and you must file an income tax refund. You have until April 15 to file a tax return for the previous tax year. For example, the deadline for 2024 returns is April 15, 2025.

Save automatically for long-term goals

We all work to get things we want, right? For bigger-ticket items like a car, college, travel or even a first home, a savings plan will help you reach your goals. One proven way to build savings is to automate your savings. You can do this by using direct deposit and designating the money you need right away to go in your teen checking account and a portion of your earnings to a savings account.

If your employer doesn’t offer direct deposit or you’re paid in cash, make a habit of depositing your savings before spending any money.

Also, seek a balance between spending and saving so you can enjoy the fruits of your labor.

When spending, distinguish wants from needs

One of the most important financial lessons for people of all ages is to understand the difference between wants and needs. Sometimes the line between want and need gets blurred. For example, you probably need a cell phone. If you’re like most of us, you want a device with latest tech, best camera and eye-popping display. Choosing a phone that meets your needs will cost less than one that has the features you want.

Distinguishing between wants and needs will help you make wise spending choices.

Learn about money management as you go

Over time, you’ll encounter many situations that require you to make decisions about your money. For example, getting and using a credit card which can build your credit score. Or applying for an auto loan for a new or used car. Equip yourself with reliable information. A good place to start is the Consumers Education webpage. Here you’ll find resources designed for all learning styles: articles, videos, podcasts and more.

Ask questions

Did you know you have a team of banking experts you can turn to when you have questions? At Consumers we’re here to serve our members, and that includes you! Stop by one of our offices or call us 800-991-2221. We welcome your questions and will do everything we can to support your financial fitness.

 

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