3 Ways Teens Can Start Saving and Investing

Most people believe that you can only start saving or investing once you are an adult, but little do they know, the small steps that you take as a teenager can pay off big time in the long run. The earlier you learn, the easier it will be in the future, giving you a head start and advantage in this difficult world where money runs EVERYTHING.

Tip 1: Open a high-yield savings account

Ok so what even is a high-yield savings account? A HYSA is a type of savings account that offers a higher interest rate than traditional savings accounts. This means that your money can grow faster through compounding interest. If you're like what does all of this mean, don't worry, I'll define some of these terms.

• Savings Account: type of bank account designed for storing money and earning interest on the balance
• Interest: the fee for borrowing money or earned for lending money
• Compound Interest: interest calculated on the initial principal of a loan or deposit

Why it's good: A HYSA is safe, accessible, and also teaches you how to become a pro at saving. 

Tip 2: Learn about custodial accounts or apps

Now you might be wondering: how can I actually start investing if I'm not even 18 yet? That's where custodial accounts come in.

A custodial account is an investment account that your parent/guardian opens for you. At first, they manage it, but the money is still yours. One you turn 18 (or 21 in some states), the account transfers fully into your name.

These accounts let you start investing in things like stocks (shares of companies) or ETFs (Exchanged Traded Funds—basically bundles of stocks). However, if your parents are not ready to help open an account yet, no worries! You can still practice by using stock market simulator apps like Investopedia Simulator, MarketWatch Virtual Stock Exchange, or Stock Trainer.

Why it's good: Getting a head start on learning on investments may provide you with confidence and experience before you ever put real money on the line.

Tip 3: Start budgeting

The most important skill you can build right at this moment is learning how to manage what you already have. That's what budgeting is all about

A budget is simply a plan for where your money goes each month. You track how much comes in (like allowance, gifts, or job income) and decide how much goes out (through spending, saving, and investing).

Getting started is easy! You can begin by using a free app like Mint, Goodbudget, or EveryDollar. You could also just grab a notebook or make a simple spreadsheet. Start by writing down your income, then list your expenses and savings goal.

Why it's good: Budgeting helps you understand your habits, avoid overspending, and hit your saving goals much faster.

You don't need thousands of dollars to start building good financial habits—the key is to start now! Whether it's opening a savings account, learning how investing works, or simply making a budget, pick one step and give it a try this week. Your future self will thank you!