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Practical Financial Solutions: The first wages of summer

By Contributor
July 26th, 2015

Your child’s first summer job means new money in amounts they have never seen before. That can be exciting – maybe too exciting, if your child can’t control their spend mode. So here are a few money management tips to help them make the most of their summer job wages.

Good habits start now:  Money handling habits learned while growing up will determine how he or she will handle money as an adult. Start motivating regular saving and investment habits now by setting a great example.

Avoid the gotta have it money pit: Buying on impulse can have a strong influence on short-term decisions that may have longer term consequences. Effective money management starts with controlling expenses so they don’t exceed income. Help set a realistic budget with measurable and attainable goals.

File a tax return: If your child’s job results in a T4 (Statement of Remuneration Paid that is issued by an employer) he or she should file an income tax return because even if their income is below taxable levels, they will start accumulating RRSP room that can be carried forward indefinitely. If your child is 19, he or she should also apply for the GST/HST credit on each tax return as they will likely be eligible for quarterly GST/HST credit cheques.

Be sure your child takes full advantage of the tax relief available to students1:

  • Scholarships and bursaries are not taxable when the student is entitled to claim the Education Tax Credit.
  • Interest paid on a student loan is eligible for a tax credit when the loan is part of a federal or provincial student loan program.
  • Moving expenses are also a tax deduction if the student moves more than 40 kilometres to be closer to school or to take a summer job.
  • Available tax credits can include the Canada Employment Credit, tuition fees for approved study course, an Education amount for each month of enrolment, a textbook credit, and a Public Transit Pass Credit.

Explain the 10% miracle: Show your child how they will have a much richer tomorrow by always saving 10% of their take-home pay. By doing so, he or she can take full advantage of the marvel that is compound interest.  
It’s their first summer job – it’s time to put your child on the path to a comfortable financial future. Sometimes an external informed opinion can help – so give your professional advisor a call.

1 Information in this article is based on federal rules only. Provincial and territorial rules may differ.

This column is sponsored by Roger Higgins, a BA, CFP Division Director for Investors Group in the Kootenays. For all your financial planning needs, contact Roger at 250-352-7777 of email at


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