Teaching budgeting basics with a teen checking account

Mother and teenage daughter sit at a countertop at a coffee shop. The teen is holding her credit card while typing on her laptop.
April 23, 2025 | Alliant Credit Union

Teen checking accounts have come a long way in the past decade. It’s rare to be handed a checkbook and check register upon account opening. Instead, you’re told to download a mobile banking app, and sometimes, the debit card is printed off the same day. It’s a lot easier to get a grasp of budgeting as we say goodbye to pen and paper account tracking and welcome all the new banking technology available at our fingertips.

Before you let your financial fledgling out into the world, check out some tips to make their first years of money lessons easier on both of you.

What you’ll learn

Get your teen in the habit of saving

Whether your teen has a job or is paid a regular allowance, any incoming funds should be budgeted to help them reach their financial goals. If they have a job, help them set up direct deposit or teach them how to use mobile deposit to deposit their paycheck.

If your teen doesn’t have a job but receives a regular allowance for chores or good grades, you can send them their allowance via recurring transfers so that they get the hang of a regular “pay period.”

Once their first paycheck or allowance is deposited, help them set up recurring transfers to savings in their online banking account or mobile banking app. Depending on how specific your teen’s savings goals are, help them choose from various budget plans that vary in detail. For example, the 80/20 budget would require one simple transfer of 20% of their paycheck to go straight to savings, while leaving the other 80% to be spent freely.

Help them pay their first recurring bill

When your teen starts making money regularly, give them the responsibility of paying a small recurring bill such as their music streaming service or their portion of the cell phone plan. This can help them get acclimated to paying a bill on time, every month.

Choose a small bill for your teen to contribute to and help them set a reoccurring payment. This way they get used to a small set of funds leaving their account at the same time each month and learn that they must keep at least a specific amount in their account to avoid over drafting on the account.

Explain how account fees work

Nobody likes checking account fees, and one of the lessons in budgeting is learning how to avoid fees so you can afford more of what you want. Teach your teen about avoidable fees and how to identify them, such as out-of-network ATM fees, overdraft charges, returned payment fees, etc.

Here are ways you can help them save more of their money:

  • Show them how to check account balances regularly in their mobile app
  • Help them find in-network ATMs
  • Teach them how to track regularly occurring bill dates

Teach them basic budgeting, such as tracking their income and spending

Helping your teen track how much they’re spending and what they are spending their money on can be very eye-opening for your young adult. Get them familiarized with personal finance apps offered by your financial institution or other third parties.

The best financial management apps often show a high-level overview of cashflow (money going in and out of an account), as well as a breakdown of categories describing where money is being spent, such as clothing, dining out, etc.

If you want your teen to have more freedom to grow and learn from mistakes, set a date to sit down with them once a month to review their spending habits and offer to discuss any budgeting questions with them. You can also show them how to use digital tools, such as financial calculators, to discover insights into their spending habits and make changes on their own.

Set spending limits on your teens’ checking account

Most teen checking accounts will have joint ownership privileges for the adult co-owner of the account so that they can monitor their teen’s spending. For example, an Alliant Teen Checking allows the adult joint owner to set transaction alerts so that they get a text every time their teen visits an ATM or uses their debit card. The account is also equipped with daily spending limits for both debit card usage and ATM withdrawals so that the teen and adult co-owner don’t have to worry about overspending.

If your teen’s checking account doesn’t have these features, make sure to sit down with them and discuss how much you’re comfortable with them spending before they have to ask your permission.

Teach them to make giving a priority

Almost every good budget plan allocates funds for “giving.” Giving can cover an abundance of categories, from monetary donations benefiting charities to funds used to spend on family and friends. You can start with something as simple as having your teen transfer five dollars to savings every paycheck for gifts for birthday parties they’d like to attend.

Teaching your teen how rewarding it feels to give someone a gift that they paid for can help them to think of other meaningful ways to use their money in the future.

 

At the end of the day, remember that learning how to budget is a constant lesson, especially as a young adult. When your teen overspends and accidentally overdrafts, use it as an opportunity to openly communicate about spending habits. Learning how to talk about money is a powerful skill that both teens and adults can benefit from.


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