Teach your teen the financial skills they won’t learn in school—from budgeting basics to building credit and long-term savings
Before your teen walks across that graduation stage, there are a few lessons that can make a bigger difference than any test they’ll take in school—and personal finance is at the top of that list.
Between managing a budget, understanding banking, building credit, and planning for the future, your teen is only a few years away from needing to make real financial decisions on their own. However, most schools still don’t cover financial literacy in-depth, and many teens graduate without knowing how to balance a budget, pay a bill, or avoid common credit pitfalls.
Whether your teen is already earning a paycheck or just starting to ask questions about money, these five essential money talks will give them the tools—and the confidence—they need to take control of their finances.
1. Budgeting Basics: Spend, Save, and Grow
Before your teen can make smart decisions about their money, they need to understand where it’s going.
Budgeting is the foundation of all financial literacy. It’s how we learn to control money instead of letting money control us.
A great starting point is teaching your teen how to split up and categorize their money. Maybe they follow the 50/30/20 rule where 50% of their income goes to needs, 30% goes to wants, and 20% goes to savings. Or perhaps a zero-based budget will work best where every dollar spent is planned ahead of time. The key is helping them see the importance of putting money toward more than just their immediate wants.
To make it real, you can:
- Create a simple budget together, either on paper, through a budgeting app, or on a spreadsheet.
- Use envelopes or jars to represent each spending category if your teen is more of a visual learner or handles mostly cash.
- Review past purchases and talk about what they’d do differently with a budget in place.
2. How Bank Accounts Work—And How To Use Them Responsibly
While today’s teens are incredibly tech-savvy, digital banking can still feel abstract or overwhelming if they’ve never had to keep track of their own money.
If your teen doesn’t already have their own bank account, this is the perfect time to help them open one. Most banks offer student checking and savings accounts that are easy to set up with a parent as a joint account holder. Some even come with teen-friendly features like spending alerts, parental controls, or even card spending limits.
Here’s what to cover when helping your teen open and use their bank account:
- How to use a debit card wisely
- How to transfer money between accounts
- How to view pending and posted transactions
- How to freeze or unfreeze their card if it’s lost
3. Understanding Credit Cards Before They Get One
One of the most misunderstood—and under-taught—parts of personal finance is credit. Yet, your teen’s credit history will eventually impact nearly every major milestone of adulthood: renting an apartment, buying a car, securing a loan. That’s why it’s essential to talk to your teen about credit before they’re old enough to open their own credit cards.
Start with the basics. Credit is essentially a way to measure someone’s reliability when borrowing money. When you borrow and repay responsibly, your credit score goes up. If you miss payments, max out on cards, or default on loans, your score drops.
Even if your teen isn’t ready for their own credit card, there are safe ways to begin building a credit history with your help:
- Become an authorized user – Add your teen to one of your credit cards with a low limit and strong payment history. They don’t need to use the card, but it can still help them start building credit through your account.
- Use secured credit cards (when age-appropriate) – Once they’re 18, a secured credit card backed by a cash deposit can be a low-risk way to learn how credit works. Just make sure they pay off the balance in full every month to avoid interest and fees.
4. How To Set and Reach Financial Goals
Goal setting in terms of personal finance is a powerful way to teach your kiddo the value of money, the importance of planning, and the satisfaction of achieving something they worked for. When teens learn how to create goals, and follow through on them, they’re more likely to become financially confident adults.
The key is to make goals specific, reasonable, and motivating. Instead of vague ideas like “save more money,” guide them to set a tangible goal such as:
- Saving $500 for a new phone
- Putting aside $1,000 toward a down payment on a car
- Budgeting $150 for back-to-school clothes
- Contributing to a future-focused savings or investment account
Once your teen has a goal in mind, help them reverse-engineer it to help them understand how much they would need to save each month in order to reach their goal by a certain deadline.
Use visuals like progress bars, a shared spreadsheet, or even a savings tracker jar. Seeing incremental progress can be incredibly motivating.
While a savings account is a great place to start saving money for more short-term goals, that isn’t the only option available to them. If your teen has earned income from a job, whether it’s from working at a coffee shop, tutoring, babysitting, or mowing lawns—they’re eligible to contribute to a managed investment account, such as a Custodial Roth IRA. This account, managed by a parent until they are old enough to take over the account themselves, allows them to invest money now and let it grow tax-free for decades. While it’s ideal to leave the money untouched until retirement, contributions can be withdrawn at any time without penalties, making it a surprisingly flexible tool for young savers.
5. What Things Actually Cost In the Real World
From rent and groceries to insurance and taxes, many teens graduate high school without truly understanding how much money it takes to cover the basics.
Sit down with your teen and walk through an example monthly budget. This could be a real snapshot of your household expenses, or you could mock up a sample budget based on what job they’d like to have after graduation and where they might like to live. Cover the potential cost of basics like:
- Rent or mortgage
- Utilities (electric, water, internet, etc.)
- Groceries and dining
- Transportation (car payments, gas, insurance, public transit)
- Phone and streaming subscriptions
- Medical insurance
- Emergency savings
Let them try to guess the numbers first, then compare that to the real cost.
Let your teen know it’s okay not to have it all figured out, but the more they understand real-world costs, the better prepared they’ll be to make smart, informed choices with their money.
Each of these five money conversations—budgeting, banking, credit, goal setting, and real-world costs—lays the foundation for a lifetime of smart money management. The truth is, your teen will be making financial decisions sooner than you think. Whether it’s managing their first paycheck, applying for student loans, opening a credit card, or paying rent for the first time, the skills they build now will shape how prepared and confident they feel in those moments. So whether your teen is a saver, a spender, a hustler, or a little of everything, keep the conversations going. Make them part of your regular routine. Encourage questions. Share your own wins and mistakes.