Money management for teens: The no-boring-stuff starter guide

Financial responsibility is one of the most essential skills for any person to learn, and the earlier you start, the more likely you are to build strong habits. Parents often wonder which money skills to teach their kids first, but one of the best ways to learn money management is by using actual money in real-world situations—especially for teens who earn money through work or allowance. 

Here, we outline our tips on money management for teens that foster a healthy financial future.

Why money skills matter more than ever for teens

Money skills are important for everyone, and especially for teens who are working and saving for their future. As college becomes more expensive and the cost of living rises, establishing good money habits now can help your child adapt and plan to stay financially secure. Learning the basics, such as tracking spending, can also give teens more freedom and confidence to make smarter, more informed choices that pay dividends in the long run.

The first step is to help teens get their finances in order by learning how to budget, save, and spend wisely. These skills and other essential tips to manage finances for young adults can also help them achieve larger financial goals, such as college, buying a car, or purchasing their first home.

Budgeting basics: Know where the money goes

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 We all want to avoid overspending, but it doesn't always come naturally! Creating a budget is one of the easiest ways to keep track of where money goes each month—which is also a critical step in learning how to identify poor money management.

1. Encourage your teen to track their allowance and any income in a spreadsheet to understand precisely how much money they make every month. 

2. Then, break down the key categories they have to pay for, such as gas, school supplies, and other essentials.

3. Capture the things they'd like to spend money on, like food or video games.

4. Remember to include categories for savings goals. 

5. Help them update the budget weekly and monitor how things evolve over time. The best budgets are flexible and adaptable to changing needs and goals. 

Spend smarter: Mastering needs vs. wants

One of the most important aspects of a budget is being able to prioritize what's most important. Talk about wants vs. needs and how to identify them. 

Have your child ask themselves, "Will this still matter next week?" Buying something now might mean having to sacrifice later.

Saving is cool (seriously): How and why to start now

Just about every savings goal is more achievable the earlier you start. Start small and encourage kids to put small amounts, such as $5 a week, into a savings account to let it accumulate. 

You can help them save and earn by using a teen debit card that offers cash back and savings rewards *.

Goal setting for great rewards

Help kids distinguish between short-term and long-term goals and how to save for each type. A good money management activity for teens is to create a custom goal map that breaks down the goal amount, by when they want to achieve it, and how much they need to save to achieve it. 

To help them build the habit, use a chore and allowance app that allows you to automate tasks and offer payments upon completion. 

Digital banking: What every teen should know

• Automate savings. Online banking** makes it easier than ever to budget and save. Teens can set up direct deposit from their jobs, transfer money from other accounts digitally, deposit funds virtually, and access them anywhere. 

• Teach them the risks. Make sure your teen knows about overdraft charges and other penalty fees that can accumulate if they overspend or budget poorly.

Start early with smart credit habits (even without a card)

Introduce the basics of credit, debt, and how each can impact their future financial moves, such as getting student loans or their first mortgage. Your teen doesn't need a credit card to understand the dangers of credit card debt or the benefits of good credit. 

Some parents even offer "practice loans" to teach smart debt management, allowing their child to borrow money to make a larger purchase, like a video game or concert ticket, and set a repayment plan (with interest) using their allowance or paycheck.

Learn to spend mindfully (vs. emotionally)

We've all made purchases that weren't the smartest. Teens, especially, may get a rush from splurging. Discuss emotional spending with them and how to spend mindfully. 

Master money management skills with Greenlight

Raising money-savvy kids is hard! But it's easier when you establish good money habits early. That's Greenlight's specialty. As the #1 family finance and safety app, we help teens and families learn to earn, save, and invest together. Join Greenlight. One month, risk-free.†

*Greenlight Core families can earn 2% per annum, Greenlight Max families can earn 3% per annum, Greenlight Infinity families can earn 5% per annum, and Greenlight Family Shield families can earn 6% per annum on an average daily savings balance of up to $5,000 per family. To qualify, the Primary Account must be in Good Standing and have a verified ACH funding account. See Greenlight Terms of Service for details. Subject to change at any time.

**Greenlight is a financial technology company, not a bank. The Greenlight app facilitates banking services through Community Federal Savings Bank (CFSB), Member FDIC.