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How teens manage their money: What parents need to know

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Parents with teenagers know nothing comes easy, including teen money management. From helping your child open a bank account to paying an allowance, you may start to feel like your child’s employer, teacher and financial advisor rolled into one. See how kids tend to spend and save, and consider teaching them some good money habits that could last a lifetime.

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Where do teens get their money?

Most teens ages 12–17 get 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

Spend or save?

Teens spend almost half of their weekly income.

Save 53%

Spend 47%

Boys ages 12–17 tend to earn less weekly than same-aged girls, but save more.

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

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

Teens are most likely to spend on clothing and food, followed by electronics/video games and entertainment including music and events. Categories such as accessories, shoes and cars make up the remainder.

12%

Music/movies/events

10%

Accessories/personal care

8%

Shoes

8%

Car

5%

Other

15%

Electronics/video games

21%

Clothing

21%

Food

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

5 financial lessons for your teens

Show your work ethic

Show your child money is earned, not just received for free.

Save for a rainy day

To develop healthy saving habits, teach your child how to save as soon as he or she is old enough to spend.

Understand budgets

Learning about budgets can help kids start saving their own money and depend less on family.

Be careful with credit

Help your teen understand the risks and responsibilities that come with using credit cards.

Compound interest

Talk with your kids about how money can earn interest over time, which helps an account grow.

Watch the money grow

Putting a little away each day can grow into big savings.

1 year              5 years            10 years

Note: Numbers do not account for inflation or any account interest.

$91      $455    $913

$0.25 a day

$365    $1,825    $3,650

$1.00 a day

Earning money—whether it’s from an after-school job or an allowance from chores—can give teens a sense of independence and maturity. While they may be eager to buy things, it’s important to teach your teenager money management lessons early. Concepts like budgeting and saving are likely to last long into adulthood.

If you’re interested in opening a savings account for or with your teen, Bank of America offers a number of options.

Disclaimer
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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.

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