Money Management for Teens
Parents with teenagers know nothing comes easy, including money management. But with young adults facing mounting levels of student loans and credit card debt, building a strong financial foundation early on is more important than ever. Here are a few important lessons to consider teaching your teen before they leave the nest.
Open a Checking and Savings Account
Don’t wait until they leave home to open their first bank accounts. Set up a checking and savings account and make sure they know the basic functions of using them, such as writing checks, making debit charges, and exploring other key features like Online or Mobile Banking.
Remind them that their checking and savings accounts are two of the most important financial tools they’ll ever use!
Create a Budget
Help your teen understand where their money is going by establishing a basic budget.
- Track spending. Before deciding how to allocate expenses, teens should track where their money goes for a few weeks by writing down everything that they’ve purchased.
- Sit down and do the math. Help your teen come up with an income total for each month, including any allowance, gifts, or after-school jobs. Then, budget necessary expenses first. If there's a shortfall, discuss ways that they can cut discretionary spending or how to increase their weekly income.
Set Savings Goals
Be sure to make saving money second nature for your teen.
- Be consistent. Teens should strive to put the same amount or percentage of their income each month toward savings goals (ex. $50/month). This will help make savings a habit.
- Watch it grow. Once your teen is saving consistently each month, explain how compound interest can increase savings.
- Spend, save, and repeat. Enroll your teen in Pioneer’s Pocket Change program, where each purchase made using their Pioneer debit card will round up to the nearest dollar and the balance will be automatically transferred to their savings account.
Take the time to teach your teen the benefits and risks of using credit cards and building strong credit scores.
- Use responsibly. By carrying a balance from month to month, your teen could pay hundreds of dollars in interest. Discourage teens from charging purchases they really can’t afford.
To get your teen started on the path to building a strong credit foundation, teens can be added as authorized users to your accounts. If your teen is older, 18 or 19, there are credit cards that cater specifically to that age group. These cards tend to start with smaller limits and get them used to using plastic, while also creating a habit of paying it off each month.
- Credit scores matter. Explain how to build a good credit history by avoiding late payments and keeping card balances low. Good credit will help your teen years down the road when securing a car or home loan.
Money management is an important skill to learn, but with a few of these tips, you’ll set up your teens for financial success!
To learn more information about how Pioneer can be a financial partner in helping you achieve your goals, call or visit one of our branch locations.
The material provided on this website is intended for informational purposes only. Links to other web sites are provided for reference and do not constitute a referral or endorsement by Pioneer or its affiliates. Please note that such material is not updated regularly and that some of the information may not be current. It is recommended that you consult with a financial professional for assistance regarding the information contained herein.