This article was edited and fact-checked by Credit Karma’s Editorial team.
Money management can be a difficult topic to broach, especially for teenagers excited to spend their own money for the first time.
Getting your teenager started on the path toward financial independence doesn’t have to be a difficult conversation. Just make sure to cover the importance of saving, budgeting and building credit. Here are some general areas you’ll want to cover to help your teen develop healthy financial habits.
- Make saving money a priority
- Budgeting and delayed gratification
- Opening a savings account
- Teaching teens about credit cards
- Teaching teens about credit scores
Make saving money a priority
With a paycheck comes the temptation to spend it on the objects and activities plastered all over social media. But saving is the first step to building good financial habits.
If you’re a parent with a young child, you can encourage this habit early on by teaching your child to set aside a portion of their allowance for future use. It’s even more important to stress the benefits of saving with your teenager, who may have income of their own to manage.
Learning to save for the future can take some getting used to, but these resources can help your teen get started on the right foot.
- Teaching teens to save (Source: Consumer Federation of America)
- Teach kids the value of money (Source: National Endowment for Financial Education)
- Talking to teens about money (Source: Consumer Action)
- Credit Karma Guide to Saving for College
- Video: The power of compound interest (Source: SaveAndInvest.org)
Budgeting and delayed gratification
After teaching your teen the basics of saving money, the next step is to discuss potential goals to save up for. These may include college, vacations, a car or another big purchase.
Delayed gratification can be tough, but getting your teen excited about a “dream purchase” can make budgeting feel less like a chore. Here are some resources to help you and your teen build a budget that fits their goals.
- Teen budget worksheet (Source: Junior Achievement)
- Teen budget worksheet (Source: GreenPath)
- Budget calculator for teens (Source: MoneyFit.org)
- Sample monthly budget for teens (Source: MoneyAndStuff.info)
- Credit Karma Guide to Budgeting
Opening a savings account
As you discuss saving money and delayed gratification, consider opening up a savings account for your teen. You can even bring up the possibility of opening up a high-yield savings account, which earns a higher interest rate on deposits than a traditional savings account. This can be a great motivator to save, and a real-life example of how delayed gratification can lead to even more savings.
- What is a savings account?
- Teenagers and saving (Source: Consumer Financial Protection Bureau)
- Why it’s important to teach financial literacy to your children before college (Source: The Literacy Cooperative)
Teaching teens about credit cards
Whether your teenager gets a credit card tomorrow or waits until college, it’s important that they know how credit cards work.
A credit card can feel like “free money” to a teen who doesn’t know the basics of credit, but it can also help build good financial habits when used with the proper care and understanding. Here are some resources to help your teen get acquainted with some basic facts about credit cards, including the perks of rewards programs and the potential pitfalls of carrying a high balance.
- Teenagers and borrowing (Source: Consumer Financial Protection Bureau)
- How does credit card interest work?
- Credit Karma Guide to Credit Cards
- The best first credit cards for young adults
Teaching teens about credit scores
Thanks to schoolwork and tests, teenagers aren’t blind to the importance of grades and numbers used to evaluate their accomplishments. While not exactly the same, grades can be a useful analogy to draw on when introducing your teen to the concept of credit scores.
Your teen may not have credit scores of their own until they start establishing a credit history at the age of 18. But they can still lay the groundwork for great credit scores by learning about what goes into a credit score, how they’re calculated and how to increase their scores over time.
- How to read and understand your credit scores
- What factors affect your credit scores?
- Credit Karma Guide to Building Credit
- Building your teen’s credit: How to do it and why it matters (Source: CollegiateParent)
Saving, budgeting, bank accounts, credit cards and credit scores are five pillars of financial literacy. Teenagers who understand these pillars will be better prepared to navigate debt and achieve their long-term savings goals.
Whether or not your teenager is learning about finance as part of their high-school curriculum, it’s important to emphasize good personal-finance habits at home. The more time you spend teaching and leading by example now, the more likely they are to thank you later.