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As teenagers start making more money, parents naturally tell them they should save it. But what exactly should they be saving towards? How much of their money should they be saving? Should they be saving for short-term costs or long-term plans?

Keep reading to learn what teenagers are spending money on these days, what teenagers could be saving towards and more.

Best Investing App + Money App for Teens−Top Pick


What are Teens Buying These Days?

teen young woman smartphone app

Today’s teenagers fall under the category of Gen Z. In 2020, Gen Z teenagers had an average of $115 in spending money each month, though this likely varied widely by age and socioeconomic status.

Where that money was spent was influenced largely by social media, the ease of online shopping, suggestions from friends and parents, and personal identity.

According to a 2019 study, over two-thirds of Gen Z males consider gaming a core component of their identity. So, it’s no surprise that gaming and other tech make up a substantial portion of teens’ spending. Fast food, beauty products, and clothing are other popular items for teens to purchase.

Similar to Millennials, many members of Gen Z prefer to spend their money on experiences over physical objects. Trying out extreme sports, going to concerts and attending Instagram-worthy events dwindles teen’s money supplies.

None of this is to imply that all of today’s teens instantly spend their money. In fact, many teens use money apps to manage their money. These include kid investing apps, budgeting apps, and more.

Related: Best Stock Trading Apps for Teens Under 18

What to Spend Money On as a Teenager

pros and cons of teen debit cards

Now that we know what teenagers spend their money on, let’s discuss what they should be doing with their money.

Teenagers and older adults alike enjoy spending money on items that will immediately bring them joy. However, every dollar spent dilutes your savings power for what you want in the future. When possible, teenagers should be setting aside their money.

Teens need to be able to differentiate between needs and wants. Teenagers who drive cars need to have car insurance and gas money. These types of responsibilities need to be focused on first. Having the ability to drive to a job can increase profits overall.

They may want new vehicles instead of used ones, but that isn’t necessarily the best use of funds. While parents cover necessities, teens are often expected to pay for fun nights out with friends, unlimited cell phone plans, college savings and more.

To be able to afford these items, one must learn how to delay gratification and save money.

Since spending power isn’t unlimited, teenagers frequently need to ask themselves questions, such as, “Would I rather eat out with friends every weekend this month or only eat out once and save the rest for college?”

Notice that the question isn’t, “Should I never eat out in order to save every dollar for college?” Money should be spent on a combination of things that make them happy and investments towards a child’s future.

Even the distant future, such as retirement, should be considered by purchasing appreciating assets.

Investing apps are an excellent way for teenagers to start investing in a way that isn’t too intimidating. There are many investing app options available.

For example, the Fidelity Youth Account offers fractional shares, a painless way to start saving, albeit in micro amounts.

Depositing lump sums is also allowed. Since the deposits are automatic, it can help a teenager save without much effort, making it one of the best investments for teenagers. Opening an account and starting to invest also comes with a free sign up bonus.

You can even get a debit card for teens to learn how to manage and spend money wisely.

Related: Best Online Jobs for Teens to Make Money at Home

Teens Shouldn’t Purely Forsake the Now for Later

Teenagers shouldn’t feel guilty when spending money on their current needs. For example, they may need to purchase a new laptop to complete school work and online side hustles. A teenager may need to buy a used car to transport herself to work or school.

High school seniors might need to pay college application fees for their dream schools. Needs like these actually help a person towards their future goals and shouldn’t be lumped into the same category as name-brand clothing and just-for-fun technology.

Plus, saving and then buying items they need can show teenagers the fruits of their labor and keep them motivated to keep saving towards more long-term goals.

Things to Save Up for as a Teenager

teenagers investing medium

Teenagers’ savings goals should have a mix of long-term and short-term goals. Some popular short-term goals include:

  • Back-to-school clothing shopping
  • School trips
  • Streaming services
  • Games & gaming equipment
  • Presents for others
  • Prom expenses
  • Lessons for a hobby (sports, singing, an instrument, etc.)
  • College application fees

Long-term savings should be contributed to simultaneously as teenagers save for the nearer future. There are a variety of long-term savings they might have, such as:

  • College (not just tuition, but also textbooks, boarding, etc.)
  • Traveling abroad (whether through school or with family or friends)
  • Used car
  • Laptop
  • Security deposit for a first apartment
  • Furniture for a dorm or apartment
  • Expected & unexpected car expenses
  • Retirement (it’s never too early to start saving for retirement)

Once a teenager has decided what they will need to save towards, it’s time for some planning and math. Calculate how much money a teen earns, whether through a job, an allowance or a combination. Then, figure out how much money is spent each month on necessities, such as car insurance.

The remaining money can be used towards goals and some recreational spending, though goals should be considered first. Once a teenager knows how much money can be contributed towards goals, they can determine how much time is needed to save up for each goal.

If it seems like the goals will take too long, one might need to adjust priorities or find additional revenue sources.

When parents can afford it, a savings match is a wonderful way to motivate teens to save more. Savings matches can be a flat dollar amount, such as “I’ll match any amount you save towards college this summer up to $5,000,” or a percentage match.

Underage teenagers need to make sure their goals align with what their parents will allow them to buy. For example, saving for months towards a tattoo when your parent won’t sign the consent form, or saving for a pet not allowed in your house, will lead to disappointment when the parent later denies the request.

Related: Best Ways to Make Money as a Teen [Fast and Simple]

Things to Save Up for as a 13-Year-Old

teenagers smiling medium

The Fair Labor Standards Act (FLSA) puts 14 as the minimum employment age in the United States (with exceptions for family agricultural work). Therefore, most 13-year-olds have few income sources.

They might be getting an allowance, working on a family farm or completing tasks for cash payments (such as babysitting or mowing lawns). Overall, money-making options are limited.

Keep savings goals for teens this age realistic. Some examples of what a teenager at this age might save up for include:

  • Movie tickets
  • School dance expenses, such as a new outfit
  • Souvenirs to buy on a family vacation
  • Non-essential sports equipment
  • Room decorations
  • Newly released books not available at the library

At this age, parents should be paying for the essentials, but having a 13-year-old save up for a luxury can help them start to learn the value of saving. It can also build their financial literacy.

Related: How Old Do You Have to Be to Buy Stocks?

Things to Save Up for as a 14-Year-Old

All of the expenses listed in the section above are also great options for a 14-year-old. At this point, the teenager may have a part-time job and more funds to allocate.

Having entered high school, it may also be time to consider future transportation and college expenses. Some additional savings goals for 14-year-olds might include:

  • Tickets to concerts, sporting events, amusement parks, etc.
  • Meals with friends
  • Used car for future license
  • Personal laptop for school work and recreational activities
  • Future senior trip
  • College (transportation to campus tours, application fees, etc.)

Many of the expenses 14-year-olds incur are still recreational ones, but it isn’t too early to start putting money aside for future needs.

What Things Should Teenagers Save Up For?

The earlier a person learns to set aside money for future expenses, the better. It’s essential teenagers find a balance between short-term and long-term savings.

Teenagers who learn to save soon find that saving comes with two rewards. One reward is finally receiving the item or experience. The other is the sense of accomplishment that comes from reaching a savings goal.

Terms and Conditions for Fidelity® Youth Account:

The Fidelity® Youth Account can only be opened by a parent/guardian. Account eligibility limited to teens aged 13-17.
1 Limited Time Offer. Terms Apply. This offer is valid for new or existing Fidelity Brokerage Services LLC (“Fidelity’) customers who open through the following link https://www.fidelity.com/go/starter-pack and fund a new, eligible Fidelity account with a minimum of $50 on or after 07/20/2022 and have not otherwise previously taken advantage of Fidelity’s $50 for $100 cash offer. Offer is limited to one bonus award per individual.
2 Limited Time Offer. Terms Apply. Before opening a Fidelity® Youth Account, you should carefully read the account agreement and ensure that you fully understand your responsibilities to monitor and supervise your teen’s activity in the account.
3 Zero account minimums and zero account fees apply to retail brokerage accounts only. Expenses charged by investments (e.g., funds, managed accounts, and certain HSAs) and commissions, interest charges, or other expenses for transactions may still apply. See Fidelity.com/commissions for further details.
4 Your Youth Account will automatically be reimbursed for all ATM fees charged by other institutions while using the Fidelity® Debit Card at any ATM displaying the Visa®, Plus®, or Star® logos. The reimbursement will be credited to the account the same day the ATM fee is debited. Please note, for foreign transactions, there may be a 1% fee included in the amount charged to your account.
5 Venmo is a service of PayPal, Inc. Fidelity Investments and PayPal are independent entities and are not legally affiliated. Use a Venmo or PayPal account may be subject to their terms and conditions, including age requirements. 
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917
About the Author

Riley Adams is a licensed CPA who worked at Google as a Senior Financial Analyst overseeing advertising incentive programs for the company’s largest advertising partners and agencies. Previously, he worked as a utility regulatory strategy analyst at Entergy Corporation for six years in New Orleans.

His work has appeared in major publications like Kiplinger, MarketWatch, MSN, TurboTax, Nasdaq, Yahoo! Finance, The Globe and Mail, and CNBC’s Acorns. Riley currently holds areas of expertise in investing, taxes, real estate, cryptocurrencies and personal finance where he has been cited as an authoritative source in outlets like CNBC, Time, NBC News, APM’s Marketplace, HuffPost, Business Insider, Slate, NerdWallet, Investopedia, The Balance and Fast Company.

Riley holds a Masters of Science in Applied Economics and Demography from Pennsylvania State University and a Bachelor of Arts in Economics and Bachelor of Science in Business Administration and Finance from Centenary College of Louisiana.