How Much Money Should a Teenager Save?

How Much Money Should a Teenager Save?

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When it comes to teenagers and money, the conversation around savings can make many feel overwhelmed or confused. Teens have likely heard from their parents that they should start saving money, but what does that really look like?

How much is enough to save at a young age, and how important is it for teens today?

Most teens should start saving at least a few dollars per month (or pay period) to help them get into the habit of saving money regularly. Exactly how much each teen should save will vary depending on their current expenses as well as how much they are currently making.

For example, a teen that is working at a fast food restaurant might only have an extra $10-$20 per pay period that they can save. While that doesn’t sound like much to put into a savings account (and it isn’t) by working to stay on a budget and save that money regularly they are learning to have more self-control.

This is an excellent skill that learning at a younger age will pay off handsomely as their earnings and in turn, savings grow.

If a teen has a higher-paying job or their parents pay a lot of their expenses for their vehicles then saving a few hundred dollars a month is a great goal to have. Again, at this age, it isn’t necessarily about how much that your teen saves but about learning to set a budget and stick to it.

If a teen (no matter their income or savings level) is able to learn to control their impulse purchases and be able to stick with a budget that they set they will be far ahead of most of their peers as they go into adulthood.

Easy ways for teens to save money

Teens today are finding it increasingly difficult to save money, especially in a time of rising tuition costs and other expenses. However, there are several ways for teens to save money that may not be immediately obvious.

One interesting way teens can save is by taking advantage of used car warranties. A used car warranty will protect against unexpected repairs or mishaps. Although not all used car warranties are a good idea (especially from shady dealerships) avoiding unexpected auto repair expenses will allow teens to save money regularly on any needed repairs by paying the same amount monthly for the used car warranty.

Of course, avoiding impulsive purchases and seeking discounts or promotions before making a purchase are both simple yet effective ways to get started on saving money right away.

And of course, setting aside some of your allowance or income for future use is another great practice that teens can do in order to save up for bigger purchases.

When should teens start saving money?

Developing a savings habit is important for teens as soon as they start making money. According to financial experts, starting early not only helps protect teens from debt when they’re older but also teaches them valuable lessons in budgeting and investing.

Whether through setting aside a weekly or monthly sum from a paycheck, or by stashing away their holiday spending money, teenagers should cultivate the notion that it doesn’t hurt to save up for future possibilities rather than spend all their hard-earned money immediately. As long-term investments grow throughout their lifetime, these funds will provide dependable financial security for whatever life throws at them down the road.

How much money should a teen save?

Financial experts suggest that teens should aim to save around 20% of every paycheck. Setting aside this much money at a young age can help teens build up an emergency fund, or start an investment portfolio for larger future goals like college tuition or retirement.

While the exact percentage will differ from person to person, setting a goal of 20% and sticking to it will help teens build strong financial habits as they age.

Therefore, if a teen makes $400 every two weeks after taxes, they should aim to put $80 in a savings account or investment fund. This may not seem like much at first, but even small amounts add up over time. If they were able to regularly meet this goal over the course of a year they will have put over $2,000 into savings. And when teens start investing their money into stocks and bonds, their savings can grow exponentially.

In addition, budgeting for occasional splurges can be helpful for teens as well. Not only does this help them learn how to manage their money responsibly, but it also gives them the opportunity to treat themselves every now and then.

At the end of the day, it’s all about finding a balance that works for each individual teenager. Whether they decide to save 10% or 20%, having a plan in place will go a long way toward helping them build healthy financial habits that last into adulthood.

Reasons why teens should save money


Setting aside money in an account during your teen years is extremely beneficial if you plan on attending college, as it can help reduce the burden of loans or other forms of financing. According to Forbes, after attending 4 years of college, the national average debt a student is left with is around $28,950.  Saving up money in high school can help lessen this number and make college more attainable.

Being savvy with your finances not only reduces anxiety and stress when it comes time to pay for college, but it also provides more flexibility for colleges that might not be offered by government-funded programs. Therefore, establishing a savings account as soon as possible is one of the best financial investments that any teenager can make today.

Financial independence

Another reason why teens should save their money is to prepare for financial independence when they become adults. Having a savings account that has been growing since high school can give teens the flexibility they need in order to confidently take on life’s unexpected expenses or even start their own business.

In addition, this money can also be used for travel expenses or even a down payment on their first home.

Finally, having a savings account gives teens the security they need to be able to take risks and pursue their dreams without the worry of having financial hardship if things don’t go as planned.


Though it may seem like a long way off, saving for retirement is another important financial goal that teens should start planning for. Starting to save for retirement as early as possible is a great way to ensure that teens will have the financial security they need when they are older.

By contributing to a retirement account such as an IRA or 401(k) while they are still young, teens can benefit from compounding returns and tax-advantaged savings, which can add up over time.

In addition, saving for retirement now gives teens the opportunity to take advantage of employer match programs, which can double their savings.

Teens can save money in a variety of ways, including through a bank account, mutual fund, or stocks

When it comes to saving money, there are a number of ways in which teens can do so. One of the most common ways is to open a bank account, which allows for easy access and deposit of funds. Teens can also save by investing in mutual funds or stocks, which can be riskier but also more profitable. Finally, teens can open a retirement account such as an IRA or 401(k), which can provide them with tax-advantaged savings and the potential for growth over time.

No matter what method teens decide to use, having a savings plan in place is key. Setting aside money each month and sticking to it can help teens develop good financial habits that will last into adulthood.

It’s important for teenagers to start thinking about saving money from an early age. By following the tips in this blog post, your teenager can develop good habits that will last a lifetime. Help them get started on the right foot by encouraging them to save at least 20% of their income. And remember, even if they don’t have a lot of money to start with, every little bit counts!

How Much Money Should A Teen Have Saved By 18?

Exactly how much money a teen should have saved by the age of 18 will vary based on factors such as the teen’s income, expenses, and financial goals as well as how much money their parents are contributing to their lifestyle.

However, it is important for teens to start saving money as early as possible in order to develop good financial habits and prepare for the future. This can include setting aside a portion of their income from part-time jobs, summer jobs, or allowance, and investing it in a savings account or other investment vehicles.

One potential goal for teens could be to save at least 10-15% of their income, which can add up to a significant amount over time. For example, if a teen earns $500 per month from a part-time job. they could aim to save $50-75 per month. This could amount to $600-900 saved for each year that they work before turning 18 years old.

Teens should also consider their future financial needs and goals, such as saving for college tuition or a car. This could mean increasing their savings rate or finding additional sources of income to reach their desired savings target.

At What Age Should You Start Saving Money?

Ideally, individuals should start saving money as soon as they start earning an income. This can help develop good saving habits and create a financial cushion for unexpected expenses or emergencies. It can also provide opportunities for long-term investments, such as a 401(k) plan or IRA, which can grow and provide financial security in retirement.

However, for individuals with high levels of debt or limited income, saving money may not be feasible until they have paid off their debts and increased their income. In these cases, it may be more beneficial to focus on paying off debts and building a strong financial foundation before starting to save.

What Percentage Should A Teen Save?

As a teenager, it is important to start saving money for future expenses and goals. The exact percentage that a teen should save will vary depending on their individual financial situation and priorities, but generally, it is recommended to save at least 10-15% of their income.

Saving a higher percentage, such as 20-25%, will allow a teen to reach their financial goals faster and have a stronger financial foundation. This can also help them avoid relying on credit cards or loans in the future.

In addition to saving a portion of their income, teens should also consider setting aside money for emergency expenses and long-term savings goals, such as a college education or buying a car. Setting clear financial goals and creating a budget can help a teenager make the most of their income and reach their savings goals.

It is also important for teens to understand the power of compound interest and the benefits of starting to save at a young age. By saving consistently, even in small amounts, over a long period of time, their money can grow and provide a substantial financial cushion in the future.

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