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.
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 and your credit score
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! Credit cards have high interest and other fees that can cause problems that will stay with you beyond your teen years. Credit cards do offer convenience. But their main purpose should be to set up 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.
If you do have a credit card, remember to review your credit report each year. A credit report keeps track of the money you’ve borrowed and paid back, including late payments. A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy. Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home. So, you can see that it’s very important to have a good credit score!
The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. You can see your credit report at annualcreditreport.com or order a copy by calling 1-877-322-8228.
Remember: only annualcreditreport.com can give you the free annual credit report you are entitled to by law. Other web sites that claim to offer “free credit reports,” “free credit scores,” or “free credit monitoring” are not part of the legally mandated free annual credit report program.
Other money matters
As you get older, you’ll have to take on responsibility for other important items, too. Some of these items include:
- Car insurance
- 401K (a savings plan for your retirement)
- Homeowner’s insurance
- Federal and state taxes
A good way to learn about these issues is by taking a personal finance class at your school, community college, or local community center.
It All Adds Up is a web site that helps teens get a head start on their financial future. Visit the site to play games and learn more about money and savings.
Using a cell phone can be great, but it can get expensive.
Do you have an unlimited talk and text plan? You still may get charged high fees, especially if you do things like playing games and watching movies. That's because your plan may only include a certain amount of “data,” which is anything you download from the Internet. If you’re not sure what your plan allows, ask your parents or your cell phone company.
One way to avoid extra charges is to log on to a Wi-Fi network any time you can. This gives you access to the Internet without using your cell provider. Of course, be careful when you are on public Wi-Fi networks. Those often aren't secured, so learn about steps to protect yourself.
Here are some helpful and fun tools to help you learn more about money management:
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.
ETrade 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, website, or organization is from the U.S. government.
Content last reviewed September 22, 2009
Page last updated December 16, 2014