How to Build Good Financial Habits for Your Teen

How to Build Good Financial Habits for Your Teen

Is giving your teen more financial independence a scary thought? Here are a few indicators that may help identify if your teen is ready.

Building good financial habits doesn't happen overnight, but that doesn't mean it has to be complicated. From setting up a budget to learning how to pay bills online to creating a savings plan, it's important to teach teens how to make smart financial decisions.

If you aren't sure where to begin, read our list of five banking tips for teens and parents. Already begun teaching your teen about finances and wondering if it's time for more financial independence? Great! Use this checklist in conjunction with the information in this article to help guide that next step.

Needs vs. Wants

The first step to good budgeting is defining needs versus wants. Does your teen track what they spend their money on, and if each expense is a necessity or just for fun? Writing down a list their expenses and making these determinations will go a long way in helping their spending and budgeting decisions. For example, food and bus fare are often needs, while movie tickets and video games are wants. If your teen can properly prioritize needs over wants in their spending, that's an encouraging sign.


Does your teen receive an allowance? How long does it last before it's gone? Make sure you chat with your teen about how to budget their allowance. This will help them learn how to use their money wisely each time they receive their allowance. If it disappears too quickly before the next time it's paid out, have a chat with your teen about how to budget more effectively.

However, if you observe responsible habits such as careful spending and budgeting of their allowance, your teen is on track to good spending habits. These skills will help to prepare your teen for budgeting between paychecks as an adult.

Paying “bills”

Paying bills might be a new concept for your teen, but all the more reason to teach them how to budget for bills and ways to pay them; i.e. cash, check, debit card, online banking, etc. If there is a debt you want your teen to pay for month over month, set a date for this payment and agree on a recurring due date. If want your teen to pay for their own cell phone bill, for example, or if your teen borrows money from you, make sure they understand the expectation to pay the bill or pay the borrowed money back. If payments are being consistently made month over month with no issues, it's a strong sign that paying off bills and debts as an adult shouldn't be an issue.

Money Management

If your teen has a cell phone, it's most likely with them 24/7. When it comes to budgeting and money management, this is actually great news for parents. Mobile apps for banking such as the BECU mobile app and Money Manager put account balances and information at your teens' fingertips. The BECU Money Manager feature makes it easy to create a budget, track spending and view transactions in real time. If you haven't done so already, help your teen set up a spending plan. This will establish a realistic budget and help your teen develop good spending and saving habits. Then use this plan to teach your teen how to track spending through the mobile app and Money Manager. If your teen can follow this spending plan with little to no issues, this is a good indicator your teen will be able to manage their money and stick to a spending plan as an adult.

”Rainy Day” Money

Life is full of unexpected curveballs. Teaching your teen how to prepare (and budget) for the unexpected is a great way to help set them up for financial success. Sit down with your teen and create a “rainy day” fund. Start by having your teen set a small amount of extra money from each paycheck or allowance payment. Then have them continue to build up their “rainy day” fund over time. If your teen continues to grow their “rainy day” fund on their own, this is a strong sign they will be able to plan for the unexpected as an adult.

Savings Plan

Beyond just simply having money for a rainy day, a short-term and long-term savings plan is also ideal to start at an early age. Not only will it give teenagers a goal to save for, but it will also assist in developing good savings habits down the road. These savings plans could include anything from saving for college (a long-term savings plan) or saving for the new iPhone (short-term savings plan). If your teen can set goals what they would like to save for and stick to it, they will more than likely be able to continue this into adulthood.

Overall, you know your teen and probably have a sense of when they'll be ready for more financial independence. However, teens that are able to stick to a budget, spend wisely, and save as much as possible are going to be much more likely to carry those habits into adulthood. Your influence will go a long way toward guiding those successful behaviors smoothly.