Money Management for Teens: How to Be Prepared for College

NC 529 IMAGE Money Management For Teens

It’s never too early or too late to engage teens in productive money management. Teaching and modeling good stewardship of money can give younger folks a solid foundation, a sense of empowerment, and habits for success that last a lifetime. Setting teens up on a money managing path can begin with just a few basics.

Develop a Habit of Tracking Expenses

Helping teens recognize and track where they spend their money is a good first step in financial literacy. It provides focus, organization, and accountability while also helping teens recognize areas where they can save money.

Various schools of thought exist on how to teach the habit of tracking expenses. Some experts say logging expenses in the moment can help teens stay mindful about why they are making certain purchasing decisions. Others suggest tracking after the fact with a spreadsheet or automating the process with a budgeting app on their smartphone. Regardless, helping teens learn how to process where their money goes can be a powerful lesson and inspire a long-lasting financial habit.

Create a Budget

A budget is the best tool to help kids learn to manage money. Setting a budget based on income, expenses, and goals can promote good money management for teens and help set a financial habit for life that differentiates between needs and wants.

Many budget templates exist online and provide a good starting point. Kids as young as 6 can learn to budget so they can reach a small goal to buy a toy or experience. Then during teen years, budgets can begin to address larger purchases such as a car or college.

The budgeting process often begins by developing a list of categories — such as clothing, gas money, entertainment, and food — to help teens determine how they want to spend their money and how they need to spend it. CFNC offers several financial aid calculators, including one designed for budgeting.

Now That You’ve Made a Budget — Use It!

Making a budget can be easier than sticking to it. CFNC offers tips on how to stay within your budget’s parameters, such as looking for sales and lower prices. Experts also recommend making a list before shopping to keep from making unnecessary purchases. Learning to use online or print coupons for purchases also can help teens learn to shop smart and stay within their budget.

Understand How Savings Can Make a Difference

Provide teens with a picture that illustrates how saving can happen with positive results. For example, you might create a chart that shows how saving just $25 per month can result in $300 by year’s end. In five years, that same monthly savings results in $1,500.

Of course, if monthly savings can be increased to $50, it can result in $3,000 over five years! A savings chart also presents an opportunity to discuss interest and inflation and their impacts on savings. Lots of games and videos exist online to teach these concepts in formats that appeal to younger audiences.

Understand the Role of Credit

Good money management for teens includes helping them understand credit and why they’ll need good credit as adults to rent an apartment or buy a car. Begin by teaching them what a credit score means and how it’s calculated. For example, credit scores can be as low as 300 (very bad) to 850 (excellent). According to, most people have a credit score between 600 and 750.

Make sure teens understand that paying bills on time and avoiding high balances on credit cards are two important ways to establish a healthy credit history. Some experts even recommend allowing teens to have a credit card. With proper supervision in a controlled environment, a credit card can serve as a good teaching tool.

Empower Teens to Get Involved in Saving for College

Start by helping your teen open an account designed to save for college, like an NC 529 Account. Do you already have an account? Teens can contribute to an existing education savings account to help the savings grow!

Encourage your child to make regular contributions by saving part of each paycheck when they start working a part-time job. Experts recommend carving out about 10 percent of a part-time paycheck for savings as a starting point, with the goal to grow that percentage. Kids of all ages can also save some of the money they receive as gifts from birthdays and special holidays.

Setting small goals in the beginning also can be productive. Help your teen set monthly and annual goals to save a specific amount of money by certain dates.

Access Planning and Education Savings Tools for Success

Regardless of education goals, learning how to manage personal finances is an important skill for all ages. CFNC has helpful financial literacy resources for high school students and first-year college students. Completing the Financial Basics course automatically enters your teen for a chance to win a $500 scholarship!

If you’re just getting started saving for college, it’s never too late to open an NC 529 Account for your child. Earnings grow tax-free when the money is withdrawn for eligible education expenses, including college expenses, apprenticeship programs, student loan payments, and more! Teens also can contribute to the fund, giving them an early stake in their own education.

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