A successful financial future is easiest to build on a solid foundation. If you have a child in their teens or pre-teens, try these five common-sense money management tips to set them up for success.
How to Help Your Child Manage Their Money as a Teenager
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1. Open a savings account sooner rather than later.
Encourage your teenager to open a savings account if they don’t already have one. This is especially useful if they have a part-time job. That way, they’ll have a safe place to store their newfound income and earn interest while they’re at it.
When opening a banking account as a teen, they may need someone over 18 to be on the account with them, so it’s the perfect opportunity to take them to the bank and help them through the process.
First, though, discuss with them how much they’d like to put in their savings account. Next, look at the minimum deposit amount at your bank of choice and go from there.
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Related: 5 Easy, Practical Ways to Teach Your Kids About Money
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2. Open a checking account to get a debit card.
A debit card is like a credit card with training wheels. It’s a good way for your teen to practice handling virtual money. Once they’re experienced with spending money with a card instead of cash, they’ll be much better prepared to get a credit card after 18.
Most banks offer debit cards with checking accounts. Have them open a checking account to start practicing using a card and manage their accounts online.
3. Create a simple budget.
Budgets are only as complex as you make them. As a teen, your child will likely have few monthly expenses and a relatively uncomplicated source of income. This is the perfect time to sit down with them and create a budget together.
When creating a simple, realistic budget with your child, start by totaling income sources such as allowance or part-time job wages. If they make extra money doing things like babysitting or refereeing on the weekend, be sure to account for that. Then, have them subtract their monthly expenses — including contributions to a savings account and miscellaneous spending money.
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Related: What Should I Do with My First Paycheck?
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4. Give them online resources to explore on their own.
Some teens prefer to learn things independently rather than from their parents. Luckily, there’s a plethora of reliable online resources to help teach them about money management.
That being said, finding a trusted source among the millions of search results can be tricky. We recommend Intuit Mint. It has an easy-to-use app that can help your teen with their budget and an informative financial advice blog full of practical, digestible money management tips (for teens and adults).
We also have a resource for you as their parent or guardian. Money as You Grow, from the Consumer Financial Protection Bureau, has tips to help you teach your teens everything they need to know. It can be narrowed down by topic, like buying a car or paying for college, and has sample questions and answers to explain things to your teen.
5. Sort out wants from needs.
Here’s one last tip for setting your teen up for long-term financial health. It’s a simple one — have them make a list of their wants and needs.
It’s such a crucial step to money management, but young teens often overlook it in the excitement surrounding their first paycheck.
Before they spend it, have them make a list of things they want versus what they need, then compare that to their budget. This way, they’re more likely to conclude that perhaps certain “needs” are actually “wants” when they see their paycheck start to shrink.
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Related: How to Help Kids Create a Healthy Relationship With Money
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Open a Youth & Student Account at Mercer Savings Bank
Opening a savings or checking account for your child or grandchild is easy at Mercer Savings Bank. Once a child can sign their name, they are welcome to open a savings account of their own, and children as young as 14 can open a checking account here.
With a parent or guardian’s oversight, teen account holders can learn how to use our app to check their account balances and make withdrawals and deposits. If you are under the age of 16, we just need to know your social security number. If you are 16 or older, please bring a valid picture ID, which includes a driver’s license, state ID, or passport.
Learn more about the youth & student account options at Mercer Savings Bank today!