How involved to be with your teen’s finances

A mother sits at a table on her laptop while her daughter looks over her shoulder smiling
June 08, 2023 | Ben Heinze

As your teen ages closer to adulthood, it’s only natural for them to desire some independence over their finances. Still, you may be feeling reluctant to let your teens have the level of control they desire and are struggling to find the right balance between giving them the freedom that helps them grow and being hands-on to teach valuable financial lessons.

Learn more about what factors you should consider and when it’s a good time to be hands-on vs hands-off with their finances.

Consider your individual teen

Truthfully, there is no one-size-fits-all approach to helping your teen manage their finances. Every teen is different, and the proper level of parenting is going to depend on your individual teen. Here’s a few things to consider.

Age

While “teen” refers to a specific age range, there’s a world of difference between a 13-year-old and a 17-year-old, and your level of involvement should reflect that. Ideally, your teen should be gradually given more freedom and control over their own finances as they age. This way, they can make a natural transition into managing their own finances in adulthood.

Financial behavior

Like adults, some teens are natural spenders, while others are natural savers. Even as a teenager, there are plenty of financial goals to work towards, and some teens may need more assistance than others in planning to reach those goals.

Maybe your teen wants to save up for a summer trip with friends, a new gaming console or even a new-to-them car once they get their license. All of those goals are going to require some degree of discipline to save for, and it can be helpful to provide some assistance if your teen is struggling on their own. If this is the case for your teen, sitting down with them and coming up with their own budget and timeline towards reaching their goal can be a great way to teach budgeting, saving and discipline.

Future plans

The timeline for how you want your teen to develop their financial skills should also be influenced by their future plans once they become an adult. For example, a high school senior planning on joining a trade and moving out after graduating may need more day-to-day financial skills to make a smooth transition. On the other hand, a teen preparing to attend college should be knowledgeable on potential student loans, but may not need the same day-to-day financial skills just yet.

Consider the accounts they need

Savings

A savings account (and better yet, a high-yield savings account) is the perfect way for your teen to start saving their money. If your teen doesn’t already have a savings account, getting them one is a great idea. Some financial institutions may have specific savings accounts for teens, while others will let your teen open an account identical to the adult version but as a custodial or joint account with a parent or guardian.

With a teen, you may not need to be too involved with their savings account. You may find it helpful to have periodic conversations with your teen about how saving money is going and what financial goals they have.

Checking

Checking accounts aren’t only useful for their practical applications, they also teach many useful financial skills your teen can use for the rest of their life. How to use a debit card responsibly, balancing a checkbook, and using ATMs are all things your teen can learn with a checking account. Like savings account, some financial institutions have teen checking accounts with special features, including Alliant.

Your teen will likely use their checking account more on a daily basis than their savings account, so more parental involvement may be helpful. Making sure your teen understands how to use their debit card and the ATMs responsibly and keep track of their account balance will help set them up for financial success going into adulthood.

Account features to look for

Low fees

While teen accounts often come with special features to help parents manage their teen’s finances, there’s no reason those accounts need to be filled with fees. There are plenty of options out there that, for example, have no overdraft fees, fee-free ATMs and ATM rebates, and no monthly service fees.

Be careful to check that both teen and adult accounts don’t charge these fees, as some financial institutions do have fees for adult accounts, but not teen accounts. You don’t want your teen to inadvertently rack up fees once they turn 18!

Debit card

With many businesses today no longer accepting cash, having a debit card in order to pay for purchases is invaluable for teens as they begin going out for activities without their parents around to pay. Double-check that your teen will receive their own debit card with their checking account. For added convenience, ensuring their card will be eligible to add to a digital wallet on their phone is a big plus.

Parental features

Many teen accounts will have options that make it easier for parents to stay involved and lend a helping hand. Here are a few common features you may find useful:

  • Spending and withdrawal limits—Set a daily dollar amount for debit card usage and ATM withdrawals to help your teen avoid overspending.
  • Transaction alerts—Get notified whenever your teen uses their debit card or takes money out at an ATM.
  • Transfer capabilities—If you’re part of the same financial institution as your teen, it’s often very easy to transfer money between your account and your teen’s.

 

Making sure your teen starts out on the right foot with their finances is an important objective for any parent. These tips can help you determine how to manage the difficult balance between being a helpful, hands-on parent while giving your teen the space and freedom they need to grow and thrive.

 

Learn more financial tips for your teen:


Ben Heinze is a marketing content specialist with a passion for financial education. Instilled with a strong sense of frugality from a young age, he views money as a means to building the life you want, rather than an end in itself. From reading Money Mentor, he hopes you discover new ways money can be used to build your ideal life—whatever that may look like.

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