Enter your search term here

Your future

Money matters

The teen years signal the beginning of independence. Having a job helps you prepare for adult life. It teaches you responsibility, gives you work experience, and puts money in your pocket. Many teens work to save for college or to pay for things like clothes, video games, entertainment, and gas or cell phone bills. Did you know that in 2005, teens spent $159 billion dollars on clothes, food, and entertainment?

Banking for Teenagers

Although teens don’t have as many financial responsibilities as adults, most teens want to know more about money and how to manage it. Learning to manage your money now will mean more in your pocket later. Whether you get money from an allowance, gifts, or a job, it is never too early to learn the basics about spending, saving, and investing. In many communities, banks and credit unions offer special accounts for teens. Teens looking to open a checking and savings account can avoid hurdles by going to the credit union or bank where their parents have an account.

• Savings Account – If you're serious about saving, keeping your money in a shoebox isn't going to cut it. It's time to start a savings account. This account should be separate from your checking account. Look for a bank that offers a higher interest rate (that's the money the bank pays you to keep your cash with them) and also make sure they don't charge a lot of service fees.
• Checking Account – There are several types of checking accounts. The basic type is mainly used to pay bills and to get cash via a debit (ATM) card to keep on hand for daily expenses. Keep in mind, some checking accounts require a minimum balance to avoid monthly fees. Learn more about checking accounts at The Banking Kids page.

Thankfully, most banks offer fee-free banking for teens. Many banks also offer bonus interest if you make more than one deposit a month and no withdrawals. Most teens under the age of 16 need parental or guardian consent to open a bank account.

Credit Cards

Teens under the age of 18 are not legally allowed to obtain credit cards without their parents' consent. But this has not stopped credit card companies from offering credit cards to teens. Having a credit card when you’re young is a big responsibility, and it should not be taken lightly.

If you do have a credit card, make sure to only use it for emergencies. Buying the “must-have” dress at your favorite store is not an emergency! The high interest and fees associated with credit cards can cause problems that will stay with you beyond your teen years. Credit cards offer convenience, but their main purpose should be to establish a good credit history, so when the time comes, you can:

• Rent an apartment
• Qualify for a car loan or mortgage
• Qualify for lower interest rates on all types of loans
• Obtain lower auto and homeowners insurance premiums
• Qualify for a job (employers are increasingly using credit scores when evaluating job candidates)

Secured or prepaid credit cards are a good option as well. These cards work just like credit cards, and most can be used at any ATM or store that accepts “plastic.” You or your parents put money in the account. And you are not able to spend more than you have deposited. You can add money to your account as needed. With this type of card, you do not need to worry about building up debt.

"It's important to have a cell phone because ... hold on! ‘Hello?’"

Cell phones are really popular today. You probably have one. Besides talking, you may use your cell phone for text messaging and video games, not knowing or paying attention to how much each of these features can cost. Beware! Cell phone charges can really add up and catch you by surprise!

One way to curb high cell phone use is to get a prepaid plan. With this type of plan, you buy the phone, activate it, and then prepay for a certain number of minutes. As you use the phone, minutes are deducted from your plan until you have none left, at which point, you can decide to purchase additional minutes. This system prevents you from going over the amount of cell phone time you have agreed upon. It also allows you to easily budget what you are spending on cell service.

Here are some helpful and fun tools to help you learn more about money management:

First.Gov for Kids: Money and Finances
Learn about the many government agencies involved in money and financial matters.

Department of the Treasury, Internal Revenue Service: Student's Page
Who pays taxes? What do teens need to know about taxes? Find out what you need to know about taxes.

Junior Achievement uses hands-on experiences to help young people understand the economics of life.

National Endowment for Financial Education (NEFE) Teen Resource Bureau
A site designed by teens to educate other teens on money and finance.

U.S. Treasury- For Kids
Click the links on this page to visit government web sites especially for kids.

Wells Fargo Bank and Operation HOPE: Banking on Our Future
Learn the basics of banking, budgeting, and investing

Learn about managing money and credit at Hands on Banking.

 

= This article, publication, web site, or organization is from the U.S. government.

Content last updated June 23, 2008

top