A teenager hands over a credit card as a payment for coffee.

Money management for teens

Lessons on money management for teens before they head to college, including how to create a budget, strategies for saving money and ways to use credit responsibly.

Money management is a vital skill that teenagers should consider learning. It can help them handle their finances better when they become adults. We share some tips for teens and parents to help them get started.

Budgeting for teens

Budgeting is the first money management skill teens should learn. Here are a few things to know:

  • Keep an eye on spending. A teen can start by recording their daily expenses. This could be on anything — clothes, fun activities, music, coffee or school supplies. Recording the expenses can help them see their spending pattern.
  • Do some math. Teens can add up all the money they get from different places, like allowances, gifts or part-time jobs, and subtract the necessary expenses first. If the money isn't enough, they'll need to figure out how to spend less or earn more.

How to save money as a teenager

Starting to save money from an early age is a good habit that will last a lifetime. Here are some tips on how a teen can save money:

  • Be consistent. Teens can make a plan to save a fixed percentage of income every month. This can help them get into the habit of saving.
  • Watch money grow. To help save consistently, teens may want to consider opening a savings account. Some student savings accounts have benefits like low fees or good interest rates. This calculator can show them how savings could grow over time.
  • Review bank statements. Looking at bank statements can show them what money comes in and what goes out. It could also highlight areas where they can cut back and save more towards long-term goals, like buying a car or going on a trip.

Teens and credit

Using credit comes with both advantages and risks. Here's some information to help teens use it correctly:

  • Authorized users. If a teen is an authorized user on a credit card, establish rules and responsibilities related to spending limits, charges and payments. It can help teach them to be disciplined and responsible on how they use their money and what they can use the card for.
  • Student credit card. Some banks offer credit cards for older teens and young adults. If they pay the bill on time and don't carry a large balance, it can help them build a good credit history. This will be useful when they want to buy a house or a car in the future.
  • Be responsible with credit. Using a credit card and not paying the full amount owed each month will result in credit card interest, which can add up quickly. Teens should try to avoid buying things on credit that they can't afford to pay for immediately.

When teenagers learn financial skills, it can help set them up for a successful financial future. Knowing how to budget, save, and manage credit will help them make smarter decisions about their money as they grow up.

This article was drafted with the assistance of Artificial Intelligence.

The information in this article is for informational purposes only and is not legal advice.

Neither State Farm nor its agents provide tax or legal advice.

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. State Farm makes no guarantees of results from use of this information.

Start a quote

Select a product to start a quote.

Find agents near
you or contact us

There’s one ready to offer personalized service to fit your specific needs.

Related articles

Start out strong with 4 financial priorities for young adults

Focusing on these factors will make a huge difference in preparing for your future.

Give the gift of education with college savings plans

You or any other family member can give the gift of education by opening a 529 or other college savings plan account specifically for future higher education expenses.

How to budget for non-monthly expenses

Everyone runs into irregular or non-monthly expenses throughout the year. Find out more about budgeting and managing them.

Teaching kids how to save for college

Teach your kids good financial habits.