Money Saving Tips for Students Working Summer Jobs

Read the Article

I remember one of my first summer jobs. It was the summer after my sophomore year of college and I was working at a fancy tech start-up in Manhattan.

I was thrilled because I was making close to $20 an hour, until I realized I was going to be living in Manhattan where $20 might get you lunch if you pick the right spot (and order it to go so you don’t pay a gratuity!).

I had one of the most educational and rewarding summers of my life but I “made” very little actual money.

While I would do it again in a heartbeat, there are a few things I would’ve done differently to make sure I kept a little more in my pocket after I went back to school.

Employee Classification and Tax Withholding
First things first, consider your employee classification, and consider your tax liability for the last year.

Chances are that, if you are a student, you didn’t earn enough to pay taxes. This means that if you are a W-2 employee, you might not need to have anything withheld.

If you did have federal taxes withheld, you may be able to get a tax refund when you file your taxes even if you didn’t make enough to file.

Another option is if you are classified as an independent contractor, meaning that you will get a 1099 at tax time.

It’s important to be careful about this, though, since you are required to pay self-employment tax if you make more than $400 as an independent contractor.

While this might be offset by other tax advantages, it’s still an important consideration.

Think about your tax situation for the summer, and see what you can do to legally reduce what you pay in taxes so that you can save more money.

Saving on Living Expenses
My rent in Manhattan was incredible. I was paying more in a month than I was for an entire semester in Pittsburgh!

If you can swing it, one of the best ways to save money as you work a summer job is to live with your parents or with some other relative.

Much of the time, you won’t have to worry about paying rent, and if you do, it’s usually inexpensive.

You can save on everything from laundry costs to food costs to utility costs, and the price is usually that you do a few chores around the house.

Then, you bank the savings, building up your bank account for the school year to come.

If moving in with your parents isn’t an option, consider moving in with a roommate.

You can check to see if there is student housing that offers a discount for the summer (many housing complexes will offer a summer special that amounts to “buy two months, get one month free”) and split the cost with a roommate. This can help you reduce your costs as you work your summer job.

Don’t forget about the tried and true frugality tips, either. Use coupons, plan your meals, split costs whenever possible, and look for ways to creatively cut back.

You can also try to carpool or take public transit, or walk or bike, in order to save on your transport costs to and from your summer job.

Contribute to a Retirement Account
If you can swing it, now is a great time to contribute to a retirement account, building up for the future.

Open an account and make tax-advantaged contributions, keep more of your money working for you. The tax advantages help your money grow more efficiently.

Plus, now is a great time to contribute, since you are a student and your income is low enough that your tax burden is fairly small.

If you want to save money for the long haul, now is the perfect time.

These are just a few of the things you can do to make sure you save money this year as you work your summer job.

Leave a Reply