A successful financial future is easiest to build on a strong 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
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. Look at the minimum deposit amount at your bank of choice and then go from there.
2. Open a checking account to get a debit card.
A debit card is sort of 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 for when they get a credit card after age 18.
Most banks offer debit cards with checking accounts these days. Have them open a checking account to start practicing using a card, as well as managing their accounts online.
3. Create a simple budget.
Budgets are only as complex as you make them. As a teen, your child will likely not have many 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 from that their monthly expenses—including contributions to a savings account and miscellaneous spending money.
4. Give them online resources to explore on their own.
Some teens prefer to learn things on their own rather than from their parents. Luckily, there’s a whole world of reliable online resources to help them learn about money management.
That being said, it can be tricky to find a trusted source among the millions of search results. We recommend Intuit Mint. It has an easy-to-use app that can help your teen with their budget and a really great financial advice blog that’s full of practical, digestible financial tips (for teens and adults).
We also have a resource for you, 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 you can use when explaining 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 their needs.
It’s such a crucial step to money management, but often it can be overlooked by young teens 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 come to their own conclusions that perhaps certain “needs” are actually “wants” when they see their paycheck start to shrink.
Saving Tips from Mercer Savings Bank
Want more budgeting and saving tips like these? Check out our saving tips blog for more helpful information on how to easily manage your finances.