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Managing Your Money

Money Management for Teens

From paying allowances to opening bank accounts, when it comes to teenagers and money, parents often play the role of employer, teacher and financial advisor. And while the job may not always be easy—and opinions often vary, one thing that most parents and teens can agree on is that Learn more about savings accounts for a rainy day is a good first lesson when teaching your teens about smart money management.

Infographic: Money Tips for Teens Show infographic Text Version

Money 101: For parents & teens

How kids earn and spend money may differ, but learning to save has never been more important.

Where do teens get their money?

Most teens between 12 and 17 obtain money from their parents either in the form of an allowance or via parents paying for things directly.

40% Allowance/family
32% Direct from parent
13% Working/job
9% Gifts
6% Other

Source: Mintel, Activities of Kids and Teens, US 2013

Where do teens spend their money?

21% Clothing
21% Food
15% Electronics/video games
12% Music/movies/events
10% Accessories/personal care
8% Shoes
8% Car
5% Other

Source: Piper Jaffray & Co., Taking Stock with Teens, Spring 2014

Spend or Save?

Teens spend their weekly windfall as it comes in, spending almost half their income.

Teenage boys age 12-17 tend to earn less weekly than same-aged girls, but save more per week.

Across all ages, teenage girls are more likely to spend rather than save.

53% saved/week
47% spent/week

Source: Mintel, Activities of Kids and Teens, US 2013

Watch the money grow

Putting a little away each day can grow into big savings.
(Note: Not adjusted for inflation)

$91 (1 year)
$455 (5 years)
$913 (10 years)

$183 (1 year)
$913 (5 years)
$1,825 (10 years)

$365 (1 year)
$1,825 (5 years)
$3,650 (10 years)

5 Lessons for your teens

  1. Save for a rainy day
    To develop healthy saving habits, teach your child how to save as soon as she is old enough to spend.
  2. Show your worth ethic
    Show your child money is something to earn, not just receive for free.
  3. Understand budgets
    Households have limited income each month. By learning about budgets, kids can start employing good saving ideas with their own money and depend less on the family.
  4. Compound interest
    Compound interest is a powerful concept. Talk with your kids about how money earns interest over time and helps an account grow.
  5. Be careful with credit
    Credit cards can be a helpful financial tool, but they're not free money. Help your teen understand the risks and responsibilities of credit from the start.

© Bank of America Corporation

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Although your priorities are likely to be different than those of your teenagers’, money management for teens is basically the same as money management for adults—just on a smaller scale. By setting goals and developing savings plans, you can help your teens understand how to save for what’s important to them. You can also talk with your kids about a variety of money topics, like how interest-bearing savings accounts can help their money grow even faster. Follow up by helping them open their own accounts so they can watch their savings build over time.