There are several reasons to hire your child: to teach her about finance, which will teach her responsibility and the value of work. However, my top financial reasons are:
- First, to write off some of the cost of raising your child – Let’s imagine your 14-y.o. daughter handles your business social media, does basic bookkeeping in QuickBooks, and cleans your offices for $8,000 per year. Why shouldn’t she be paying for her own clothes and makeup, saving for a car, buying her own iPad, etc.? This teaches your child to budget and be responsible with money.
- Second, so that she can set up a Roth IRA as early as possible. Say what? That’s right – there is no age limit on setting up a Roth IRA – you just need earned income. The younger and lower-earning the individual, the more sense it makes to fund a (non-deductible) Roth IRA. You don’t have to put your own child’s money in it, just fund it yourself. (Then you can also teach her about investing at an early age.)