💵 Stuff Every Teen Should Know About Money: Training Guide

Starting a Job

Form W-4 tells your employer how much federal income tax to withhold from each paycheck. The IRS suggests filling out a new W-4 each year and whenever your situation changes.

On Form I-9 you fill out Section 1, Employee Information, at the time of hire. Then you show documents that prove your identity and permission to work.

The employer must complete its part of Form I-9 within three business days. For a job lasting less than three business days, the employer must complete verification at the time of hire.

A worker under 18 who has no photo ID may use a school record or report card to prove identity.

Taxes and Your Paycheck

Withholding is money your employer takes from your pay and sends to the government for your taxes. It is credited against what you owe when you file your tax return.

FICA taxes fund two programs. They are Social Security and Medicare.

An employee pays 6.2 percent of wages for Social Security tax. The employer pays a matching 6.2 percent.

An employee pays 1.45 percent of wages for Medicare tax. Medicare tax has no wage base limit.

Gross pay is pay before taxes and deductions. Net pay is what you take home after taxes and deductions.

Minimum Wage and Teen Work Hours

A minimum wage is the lowest pay allowed by law or contract. The federal minimum wage is set by the Fair Labor Standards Act.

Federal law sets a general minimum age of 16 for most non-farm jobs. Some jobs allow 14 and 15 year olds to work outside school hours.

For jobs declared particularly hazardous, federal law sets a minimum age of 18.

On a school day, a 14 or 15 year old may generally work up to 3 hours. When school is not in session, the limit is up to 8 hours a day.

In a week when school is in session, a 14 or 15 year old may generally work up to 18 hours. In a week when school is out, the cap rises to 40 hours.

Outside summer, a 14 or 15 year old may generally work between 7 a.m. and 7 p.m. The evening limit moves to 9 p.m. from June 1 through Labor Day.

Types of Work and Pay

Earned income comes from working for someone who pays you or from running a business. Wages and tips from a job are earned income. You will need a Social Security number to get a job.

A gig is a single project or task a worker is hired to do. Gigs are often short-term and found through a digital marketplace.

A payroll card is a prepaid card an employer uses to pay wages. A pay period is the amount of time you work before being paid, such as a week or month.

Bank and Credit Union Accounts

Direct deposit sends money electronically to your account. Some employers let you split your paycheck between checking and savings, which is an easy way to save automatically.

A checking account is meant for everyday deposits, bill paying, and withdrawals. A debit card spends directly from it.

A savings account generally pays you interest for keeping money there. At a credit union, a savings account is sometimes called a share savings account.

A credit union is owned by its members. Banks and credit unions both accept deposits and make loans.

A certificate of deposit, or CD, usually has a fixed maturity date and a fixed interest rate. You agree to leave the money until the maturity date.

Deposit Insurance

FDIC insurance covers at least $250,000 per depositor, per bank, per ownership category. Joint accounts and single accounts at the same bank are insured separately.

FDIC insurance covers deposit accounts such as checking, savings, money market accounts, and CDs. It does not cover stocks, bonds, mutual funds, or crypto assets.

Since 1933, no depositor has lost FDIC-insured money because of a bank failure. Insured deposits are paid back if the bank fails.

Debit, Prepaid, and Mobile Banking

When you pay with a debit card, you are spending your own money from your checking account. A credit card is a loan, so you borrow and pay interest on any balance you carry.

With a prepaid card, in most cases you can spend only what you loaded onto it. It is not a credit card, so you are not borrowing when you use it.

With mobile banking, you can generally deposit a check by photographing it, but not cash. Banks may have a different timetable for funds from mobile check deposits.

To compare how much interest savings accounts pay, use the Annual Percentage Yield, or APY. APY shows how much interest you earn in one year, including the effect of compounding.

An overdraft happens when your account lacks the funds for a transaction but the bank pays it anyway. Checking your balance and setting low-balance alerts can help you avoid overdrafts.

Protecting Your Account

A bank may hold a deposit longer than one business day if the account is younger than 30 days. Other reasons include repeated overdrafts or a check the bank believes may be uncollectible.

If you report a lost debit card within two business days, you owe at most $50 for unauthorized charges. After two business days, you could be responsible for up to $500.

After your statement shows an unauthorized withdrawal, notify your bank within 60 days. Wait longer and you could owe the full amount of transactions after that window.

After you report an unauthorized transaction, a bank or credit union generally has ten business days to investigate. If the account has been open less than 30 days, the bank may take 20 business days.

Memorize your debit card PIN and never write it on the card. If a card or wallet is lost, a PIN written down gives a thief access.

Making a Spending Plan

A budget is a plan for the money you expect to earn and how you will save or spend it over a set time. It is also called a spending plan.

Fixed expenses are bills that must be paid each month and cost about the same, like a phone plan or subscription. Variable expenses change from month to month.

One easy way to make saving automatic is to set up recurring transfers to savings. Keep an eye on your checking balance so the transfer does not cause an overdraft.

Needs, Wants, and Opportunity Cost

Needs are basics people must have, such as food and shelter. Wants are nice upgrades you can live without.

Opportunity cost is the next best use of money or time that you give up when you make a choice. If you spend $40 on a game instead of saving it, the opportunity cost is the value of the saving you gave up.

Inflation means prices of goods and services rise over time. The same dollar buys less than before, so money in a drawer slowly loses buying power.

Hidden Costs

In-game currency like coins or gems can hide the real dollar cost of what you buy. Games often use odd exchange rates that make it hard to notice how much real money you are spending.

One way to spend more carefully is to avoid storing a card on a gaming account. Taking an extra step before buying gives you time to think.

A car loan payment is only part of owning a car. Insurance, repairs, and upkeep add up, and a larger down payment can reduce loan costs.

Saving First and Emergencies

A common money rule says to save at least 10 percent of what you earn. Doing it automatically makes saving a habit.

An emergency fund covers surprise costs such as car repairs, medical bills, or lost income. Using savings means you avoid high-interest credit cards or loans.

The main reason to build an emergency fund is to cover surprises without credit card debt. People with little savings may rely on credit cards after a surprise bill.

Pay yourself first means move part of each paycheck into savings before spending. What is left is what you budget for spending.

For a goal within a year or two, keep the money in a savings account. Savings accounts are safe and help make sure the money is there when you need it.

How Money Grows

Compound interest is interest paid on the principal and on the accumulated interest. Over time this snowball effect helps savings grow.

$100 earning 5 percent compounded yearly grows to about $162 in 10 years. Without compounding it would be $150, because you also earn interest on interest.

Saving $100 a year from age 14 at 5 percent grows to about $23,000 by age 65. You would put in only about $5,100 of your own money, and time does most of the work.

The Rule of 72 estimates how long money takes to double. Divide 72 by the interest rate, so at 8 percent a year, money doubles in about 9 years.

Investing Basics

Owning a share of stock gives you a share of ownership in a company. Stock prices can go down as well as up.

Large company stocks have lost money on average about one year in three. Stocks can grow over time, but they do not climb in a straight line.

A bond is a debt security, like an IOU. When you buy a bond, you lend money to the issuer, and the issuer promises to pay interest during the life of the bond.

If interest rates rise, selling an older, lower-rate bond may require selling it at a discount. Newer bonds pay more, so buyers want a lower price for your older bond.

An index fund tries to track the returns of a market index. It is a type of mutual fund or exchange-traded fund, and index funds have generally followed a passive style of investing.

Diversification means spreading money among various investments so a loss in one may be offset by gains in others. As investment risk rises, investors generally want higher returns.

Retirement Accounts

If an employer matches 401(k) contributions, save at least enough to get the full match. A match is extra money from your employer when you contribute.

With a Roth IRA, you pay tax on the money before it goes in, using after-tax dollars. Qualified withdrawals, including earnings, are generally tax-free.

With a traditional IRA, contributions are typically tax-deductible, and you pay tax on earnings when you withdraw them in retirement.

To put money in an IRA, you generally need taxable compensation from working. Compensation includes wages, salaries, tips, and bonuses.

Credit Reports and Scores

Most credit scores fall in a range from 300 to 850, and higher is better. You have more than one credit score because different companies use different formulas.

The number one factor in most credit scores is whether you pay your bills on time. Income is not part of a credit report.

A credit score is calculated from information in your credit report. Your credit reports and credit scores are two different things.

Experts advise using no more than 30 percent of your credit limit. Keeping balances low, ideally paying in full, helps your score.

You can get free credit reports every week from the three nationwide bureaus. Checking your own credit report has no effect on your score.

Being credit invisible means having no credit history with the credit bureaus. Many young people are credit invisible until they start using credit carefully.

Negative Marks and New Applications

Most negative information can stay on your credit report for seven years. The impact fades as the marks get older and you pay on time.

A bankruptcy can stay on your credit report for up to ten years. That is the longest-lasting negative mark most people face.

Applying for lots of credit in a short time can make lenders think you are dealing with financial setbacks. Only apply for credit that you need.

Credit Cards

Under 21, a card issuer generally requires proof of independent ability to pay, or a cosigner over 21, to give you your own credit card.

If a thief uses your lost credit card, the most you owe is $50 for unauthorized charges. Many card agreements say you owe nothing.

Many credit card companies calculate interest daily using your average daily balance. Carrying a balance gets expensive.

A grace period is the time between the end of a billing cycle and the due date. You may avoid interest on purchases if you pay your balance in full by the due date.

A variable APR changes with an index interest rate. A fixed APR does not fluctuate with changes to an index.

Loans and Buy Now, Pay Later

If you owe 18 percent on a credit card and want to invest, pay off the high-interest card first. Eliminating high-interest debt generally beats investing.

Before visiting a car dealer, get preapproved by a bank or other lender. Preapproval shows your interest rate, loan length, and maximum amount.

When you borrow through a dealer, the dealer may add an extra percentage on top of the lender's rate. That usually makes the loan cost more than a loan you arrange directly with a bank or credit union.

Choosing a car loan with fewer months means you make fewer payments, so you pay less total interest. The trade-off is that each monthly payment is larger.

A typical buy now, pay later loan lets you pay off the balance in four or fewer payments. Most BNPL plans charge some fees, like late fees, even if they advertise no interest.

Tax Basics for Teens

For 2025, a dependent under 65 who is not blind must file if unearned income is over $1,350. Unearned income includes interest, dividends, and capital gains.

For 2025, a dependent teen with only job pay must file if earned income is over $15,750. Wages, tips, and similar pay are earned income.

If your employer withheld tax from your pay but you do not have to file, file anyway to get your refund. Withholding is credited back only when you file.

If your employer withholds too little tax from your pay, you may owe a penalty when you file. The IRS Tax Withholding Estimator helps you pick the right amount.

For the 2026 filing season, IRS Free File guided software was free for adjusted gross income up to $89,000. Fillable Forms are free for any income level, but you do the math yourself.

Paying for College or Training

You do not have to pay back grants and scholarships if you meet their requirements. They are free money for school.

Work-study programs are part-time jobs on campus. The work-study amount in your aid offer is the maximum you can earn.

Students with no credit history usually need a cosigner, often a family member, to get a private student loan. Federal student loans usually need no cosigner.

On a subsidized federal student loan, the government pays the interest while you are in school. Subsidized loans are your cheapest option for borrowing.

On the FAFSA, a grandparent or legal guardian who raises you does not count as a parent unless they legally adopted you. The form counts only legal parents, like biological or adoptive parents.

File the FAFSA as early as you can because state and college aid deadlines vary and can be as early as October 1. Some aid is first-come, first-served.

Job, Payment, and Student Loan Scams

Use mobile payment apps only with people you know and trust. Even when someone you know asks for money, confirm it is really them before sending.

You can report an online scam involving a payment app to the FBI's Internet Crime Complaint Center. You can also contact local police, your state attorney general, and the Federal Trade Commission.

A red flag of a student loan scam is a claim to be affiliated with the Department of Education. If you are suspicious, contact your current loan servicer directly.

A boss who says you must pay a fee to get hired is running a scam. Real employers pay you, not the other way around.

If a boss sends you a check to deposit and asks you to send some back, it is a fake check scam. The check will bounce, and you will owe the bank the amount.

Spotting and Reporting Scams

No real business or government agency will ever tell you to pay with a gift card. Gift cards are for gifts, not for paying bills or fines.

Scammers want you to act before you have time to think. They create urgency and say there is a problem or a prize.

An ad that says learn to trade and get rich quick is misleading. No one can guarantee big profits with little risk.

A text with a link that asks you to update your payment info is likely phishing. Contact the company using a phone number or website you know is real.

Report scams to the Federal Trade Commission at ReportFraud.ftc.gov. For money you sent, also tell your bank, the payment app, or the card issuer right away.

If a 15-year-old already has a credit report, it could be a sign of identity theft. A child under 18 generally has no credit report, so someone may have used their information.