Teen Money

Lessons

1. Lesson 1: Bank accounts: checking, savings and why both

   A checking account is for money moving through your life — it is spent, swiped and transferred. A savings account is for money standing still, usually paying a little interest while it waits for a purpose.

   • Most banks and credit unions offer teen or student accounts with no monthly fee, often with a parent or guardian as joint owner until you are 18. Credit unions are member-owned and often cheaper on fees; online banks often pay more interest but have no branch.
   • The two things worth comparing before opening anything: the fee schedule (monthly maintenance, overdraft, out-of-network ATM) and whether deposits are federally insured — FDIC for banks, NCUA for credit unions.
   • Keep the two accounts separate on purpose. Spending money and saved money behave differently when they sit in the same place.

   Simple example

   You get $200 for your birthday. $50 goes to checking for the things you actually want this month; $150 goes to savings so it is still there in six months when something bigger comes up.

   Mistake to avoid

   Ignoring overdraft. Spending $4 you do not have can trigger a fee many times larger than the purchase. Decline overdraft coverage on a debit card.

   One action: Open or check one savings account this week and read its fee schedule top to bottom.

2. Lesson 2: Your first paycheck: gross, net and the missing money

   Gross pay is what you earned. Net pay is what lands in your account. The gap is withholding: federal income tax, Social Security and Medicare (together, FICA), plus any state or local tax.

   • A W-4 form tells your employer how much federal tax to hold back. Fill it out carefully — too little withheld means a bill later, too much means you lent the government money free all year.
   • Your pay stub is a document worth reading: hours, rate, gross, each deduction, and year-to-date totals. Errors happen, and they are far easier to fix in the same month.
   • If you are paid in cash or as a contractor, no tax is withheld for you. That money is not all yours — set part of it aside.

   Simple example

   You work 20 hours at $14 = $280 gross. FICA takes about $21, federal withholding a little more, so roughly $245 arrives. Budget from $245, never $280.

   Mistake to avoid

   Spending against gross pay. Plans built on the bigger number come up short every single pay period.

   One action: Read your next pay stub line by line and write down your real hourly take-home.

   Tax savings calculator

3. Lesson 3: Side hustles and gig money: the tax nobody withholds

   Babysitting, lawn care, reselling, tutoring, content and delivery apps all count as income. When you work for yourself, no one withholds tax from what you are paid — that job is now yours.

   • If your net self-employment earnings (what you took in minus real business costs) reach $400 or more in a year, you generally have to file a tax return and pay self-employment tax for Social Security and Medicare, even if you owe no income tax.
   • Apps and payment platforms may send you and the IRS a Form 1099 reporting what you were paid. Income is still taxable when no form arrives.
   • Keep a simple record from day one: date, who paid you, how much, and receipts for supplies, mileage or fees. A notes app or a spreadsheet is enough.

   Simple example

   You clear $2,000 reselling sneakers after costs. Self-employment tax alone is roughly $280, so moving 15–20% of each sale to a separate savings account covers it with room to spare.

   Mistake to avoid

   Thinking money from an app or cash jobs does not count because no one handed you a form.

   One action: Start a one-page income and expenses log for any money you earn outside a paycheck.

   Tax savings calculator

4. Lesson 4: Budgeting that survives a real week

   A budget is not a punishment list. It is a plan you write once so you do not have to make thirty small decisions under pressure later.

   • Start with three buckets: money that must go out (phone, gas, anything you committed to), money you choose to spend, and money you move to savings first.
   • Pay savings first, not last. A $25 automatic transfer on payday survives; whatever is 'left over' at month end usually is not.
   • Review three months of actual statements before trusting your own estimate of what you spend. Memory is consistently wrong about food and subscriptions.

   Simple example

   Take-home $245 per pay: $50 to savings on payday, $60 for gas, $135 for everything else. One number to track, not twenty.

   Mistake to avoid

   Building a budget so tight that one pizza ruins it. Leave room for normal life or you will abandon the plan in week two.

   One action: Set one automatic transfer to savings on your next payday, even if it is $10.

   Wealth snapshot

5. Lesson 5: Payment apps and cards: money moves fast, and so do mistakes

   Payment apps and instant bank transfers are built for people you know and trust. Once you send money to the wrong person — or to a scammer — it is often treated like handing over cash and can be very hard to get back.

   • A debit card spends your own money today. A credit card borrows money you repay later. Buy now, pay later plans split a purchase into payments; they are still debt, and missed payments can bring fees and hurt your credit.
   • A balance sitting inside an app may not be protected the way money in an insured bank or credit union account is. Move money you are keeping to your real account.
   • Use a PIN or face lock on every money app, turn on alerts for every payment, and double-check the name and handle before you tap send.

   Simple example

   Splitting concert tickets with a friend you see every day is a good use of a payment app. Paying a stranger online for tickets you have not seen is how many teens lose money.

   Mistake to avoid

   Stacking several buy now, pay later plans at once. Each payment looks small; together they can take most of a paycheck.

   One action: Lock every money app on your phone and turn on payment alerts today.

6. Lesson 6: Credit basics: what a score actually measures

   A credit score is a lender's shorthand for the odds you repay on time. It is built from your borrowing history, not from your income or your savings.

   • Payment history and how much of your available credit you use carry the most weight. Length of history, mix of account types and recent applications matter less.
   • Credit usually starts with an authorized-user spot on a parent's card, a student card, or a small secured card. All of them build history only if the balance is paid in full and on time.
   • Your score later prices a car loan, an apartment application, some insurance, and a business loan. Years of boring on-time payments are what make future money cheaper.

   Simple example

   A card with a $500 limit and a $450 balance reports 90% utilization and can pull a score down even when you pay it off — keeping the reported balance near $50 looks very different.

   Mistake to avoid

   Paying only the minimum. It keeps the account current but the interest rate on the rest is usually punishing.

   One action: Learn where your credit report comes from and check it free at AnnualCreditReport.com.

7. Lesson 7: College costs: the sticker price is not the price

   Published tuition is a starting number. What matters is net price: tuition, fees, housing and books minus grants and scholarships you do not repay.

   • Every school publishes a net price calculator. Running it for three or four schools before applying changes which list you build.
   • Grants and scholarships come before loans. Federal student aid starts with the FAFSA; many state and school awards use the same form and have earlier deadlines.
   • Compare the total four-year cost and the likely starting salary of the field together. The same degree at two schools can differ by tens of thousands of dollars in borrowing.

   Simple example

   A $52,000 sticker school offering $34,000 in grants costs $18,000 a year — less than an $28,000 sticker school offering $4,000.

   Mistake to avoid

   Choosing by sticker price alone, in either direction, before running net-price numbers and aid offers.

   One action: Run the net price calculator for two schools you are considering.

   Compounding calculator

8. Lesson 8: Scam awareness: pressure is the tell

   Nearly every scam needs one of three things: urgency, secrecy, or an unusual payment method. If a request has two of the three, stop.

   • Common ones aimed at young people: fake job offers that send a check and ask you to wire part back, 'get paid to hold money' mule schemes, gift-card demands, crypto doubling offers, and account-verification texts.
   • No legitimate employer, bank, government agency or family member needs gift cards, crypto, or a wire in the next ten minutes.
   • Verify through a channel you find yourself — the number on your card, the school's official site — never the number or link in the message.

   Simple example

   A 'remote job' mails a $2,400 check, asks you to deposit it and send $1,800 for equipment. The check bounces days later and the bank takes the full amount back from you.

   Mistake to avoid

   Trusting that money showing in your balance means the deposit cleared. Availability is not the same as cleared funds.

   One action: Turn on transaction alerts for your account and agree with yourself: no payment decisions inside ten minutes.

9. Lesson 9: Protect your identity before you have credit

   Your Social Security number is the master key to your financial identity. Young people are targeted because a stolen identity can be used for years before anyone checks a credit report.

   • Share your SSN only when it is truly required — a job, a bank account, a tax form, financial aid — and ask why when anyone else wants it.
   • A credit freeze stops new credit from being opened in your name. It is free at each of the three credit bureaus, and parents can request one for a child under 16.
   • Use a password manager or unique long passwords, and turn on two-step sign-in for email, banking and school accounts. Your email account is the one that resets all the others.

   Simple example

   A 'free gift card' form asks for your name, birthday, address and SSN. That is everything needed to open an account in your name — a real prize never needs it.

   Mistake to avoid

   Reusing one password everywhere. One leaked site then opens your email, and your email opens everything else.

   One action: Turn on two-step sign-in for your email account and ask a parent about a credit freeze.

10. Lesson 10: First investing concepts: ownership and time

    Investing means buying a share of something productive — a slice of companies, most often through a low-cost index fund — and letting time do the work.

    • Compounding is growth on top of previous growth. It looks slow for years and then does most of its work at the end, which is why starting early beats starting big.
    • Risk is real: prices fall, sometimes for long stretches. Money you need within a few years does not belong in the market.
    • If you have earned income from a job, a custodial Roth IRA is one of the strongest starting places — contributions are made after tax and qualified growth comes out tax free later.

    Simple example

    $50 a month from age 16 to 26, then never another dollar, grows into far more by 65 than $50 a month started at 35 — purely because of the extra decades.

    Mistake to avoid

    Chasing whatever is up this month. Individual hot picks and crypto tips are speculation, not a foundation.

    One action: Read what an index fund is and use the compounding calculator with your own number.

    Compounding calculator

Educational content only. Nothing here is tax, legal, investment or insurance advice. Speak to a CPA, attorney or licensed adviser before acting.