Ultimate Guide: Copper’s Guide to Saving Money (for teens)

Teen banking

Copper’s guide to saving (for teens)

Saving. It may seem like a boring thing to do with your hard-earned dough, but saving money is one of the best things that you can do for your future. As a teenager, earning and saving money can be challenging, but fret not! In this guide, we’ll cover how teens can save money, including pointers on how to get the most out of your savings.

The basics of saving money

Saving money can be tough, so we’ve compiled some easy-to-follow tips. Saving will not only allow you to become more financially independent, it will also create good money management skills that will last a lifetime. Here are some of the basics for how to start saving money as a teenager.

Spend less than you earn

This is the most important part! Saving money just boils down to putting more money aside than you spend. A great place to start is to make a budget with your typical expenses, and how much you can save. And then stick to it!

Make specific savings goals

It’s a great idea to set goals for yourself—as large as renting your first apartment, or as small as a new pair of shoes. You can also set simultaneous saving goals, and that way you can meet your more modest goals and reward yourself while making strides towards the big-money items.

Use a bank account

It’s just too tempting to raid the piggy-bank whenever you want to treat yourself. A savings account adds steps between you and your money to promote thoughtful purchasing. Copper is a great banking option for teens and lets you create multiple savings buckets that tie to your savings goals.

Start earning money

Saving money starts with earning money! Getting an allowance, having a summer or part-time job, or selling crafts are just a few ways you can start making some moolah. Learn more in our guide: How to earn money as a teenager.

Banking options

So using a bank account is key for saving money… What kind should you choose?

First of all, there are different types of banks and credit unions – some that are brick and mortar, some that are online only. Because online banks have less overhead costs than their earthly brethren, they typically can offer higher interest rates, lower minimum balances, and have less pesky fees—all points in your favor when you’re trying to save.

Copper is a new online banking service aimed at connecting teens with their money, and helping them gain valuable financial literacy. Getting a Copper account is as simple as downloading the app, answering a few questions, getting a parent or guardian to do the same, then bam! You’ve got a Copper account ready to go so you can start spending (and saving) with ease.

Types of bank accounts

There are also different types of bank accounts, the most common of which are checking and savings accounts.

Checking accounts can be used for everyday transactions and writing—you guessed it—checks, but don’t usually earn interest. Checking accounts are linked to debit cards that can be used for everyday spending. Because they’re used for spending, looking at the transaction history on your checking account can be helpful for creating and maintaining a budget.

Savings accounts are better for storing money, and typically earn interest on the money that they hold. However, there are sometimes limits on how often you can make withdrawals from these accounts.

With Copper, you can have both a checking and savings account that you manage right from your phone. Download Copper now to get access to tools that help you save money, like creating designated saving “buckets” so you can work towards your goals and track your progress.

What teens should be saving for

When you’re considering what to save money for as a teenager, it can be helpful to set goals in the short, mid, and long-term. You can also set milestones for yourself, like ‘when I save X amount towards my long-term goal, I’ll be able to reward myself with Y’.

Short term saving goals

There are plenty of things you’ll want to spend your hard-earned cash on that won’t take too long to save up for. Things like concert tickets, fancy outfits (think prom and graduation!), and gifts for your squad are all great short term goals.

Mid term saving goals

There are also plenty of things that cost a little bit more that can be great mid-term savings goals. Things like saving for a car, a trip or vacation, or a new phone are all great mid-term goals to save money for as a teenager.

Saving for a car

To save up for a car, it’s a good idea to look into what is available (the average price of used cars fluctuates), what you can realistically afford with your savings, and costs that will come up once you own the car, like maintenance, gas, and insurance.

Saving for gadgets

The same principles apply when buying a phone or other tech. Think about additional costs that may come up (software, repairs, warranties), and consider up-front costs vs. the cost of maintenance. Do your research! In this day and age there is no shortage of product reviews online.

Saving for a vacation

Another idea for savings is vacations! Again, keep in mind costs that may come up- what will you need on your trip? How much money will you spend once you’re there? Planning ahead will ensure that you’ll be ready to chill without worrying about money, AKA the LEAST amount of fun you can have.

Long term saving goals

So here we go: saving for the big expenses, like college, renting an apartment and—gasp—retirement!

Saving for college

Let’s start with higher education. College can be an amazing place for self-discovery, creating community, and having a ton of late-night fun. Oh yeah, and you’ll hopefully learn some stuff. But as you know, tuition, room and board and other expenses add up really quickly to… a ton of money.

A few ways to keep college costs low:

Saving for an apartment

Before, after, or during college, you may also find yourself apartment hunting. You’ve probably heard that the rent is too damn high… this is true. And when moving into your apartment, you will probably need to pay a security deposit, along with getting supplies and furniture. Starting to save for these expenses early is the best way to prepare for your first place.

Saving for retirement

Moving farther into the future, let’s talk about retirement savings. I know what you’re thinking: how is retirement in an article about what to save money for as a teenager? But the truth is, the sooner you can start saving for retirement, the better. While it may not be your first concern, anything you can put away to start saving for your “golden years” will make your future self that much more comfortable.

How long does it take to save?

Let's take a look at the math behind saving money. We can do this in two ways - based on your savings rate or based on time.

Savings rate: Let’s say you want a nicer guitar, and have your eye on one that will cost $300. After looking at your budget and figuring weekly earnings−weekly spending, you figure you can save $20 each week. 300/20=15, meaning it will take 15 weeks or about three and a half months to meet that goal.

Time: Some things might be time-sensitive. Maybe you know an artist you really like is going to be on tour in your area, and tickets may sell out as soon as they become available. If the tickets go on sale in four weeks and cost $120, then you would divide 120/4=30. This means you would need to save $30 each week to save enough to buy the tickets on the date they go on sale.

How to speed up savings

Once you start saving, we predict you’ll really enjoy the feeling of watching your savings grow, and being more in control of your finances. You may also be wondering “how can I save even more money?” Well since you asked, we have a few suggestions on how to save even faster:

Cut costs. By looking at your budget or reviewing your transaction history, you can tell where to trim costs down so you have more money left over to save. Copper makes it easy to view all your transactions and know where your money's going.

Put your savings in a high-yield savings account. While the national average interest rate for savings accounts is only 0.06 percent, some online banks are able to offer interest rates on savings that are ten times that.

Invest your money. No need to become Leonardo DiCaprio from The Wolf of Wall Street to dip your toe into the world of investing.

Frequently asked questions (FAQs)

How old do I have to be to get a savings account?

You must be 18 or over to open your own savings (or any bank account) without a parent or guardian. Until your 18th birthday, a parent or legal guardian must set up a custodial or joint account, which is your property, but managed by your parent until you turn 18.