Learning healthy financial habits as a teenager can set Australian teens up for a lifetime of financial stability. With the cost of living rising and the importance of financial independence growing, developing good money habits early can make it easier to avoid money struggles as an adult.
Here, we share practical money tips tailored to Australian families to help teens build a strong financial foundation. From budgeting to investing, these steps are designed to fit into the Australian financial landscape.
12 Smart Money Tips for Australian Teens
Cultivating financial know-how as a teenager can prevent costly mistakes later. These tips can help teens in Australia learn to manage money effectively and build lasting habits.
1. Open a transaction and savings account
Opening a bank account is one of the first steps towards managing money responsibly. Australian teens can open a transaction account for everyday spending and pair it with a high-interest savings account for their goals.
Many Australian banks, such as Commonwealth Bank, Westpac, and NAB, offer youth accounts with no monthly fees and online tools to help track spending. Teens under 18 typically need a parent or guardian to co-sign when opening an account.
Pro tip: Look for savings accounts with competitive interest rates and set up automatic transfers to build your savings.
2. Set financial goals
Setting clear financial goals can keep teens focused. Short-term goals might include saving for a school formal or a new bike, while long-term goals could involve saving for university fees or a first car.
Using the SMART framework (Specific, Measurable, Achievable, Relevant, Time-bound) can make goals more actionable. For example, instead of saying, “I want to save for a car,” aim for, “I will save $5,000 for a car in two years by saving $50 a week.”
3. Understand the power of time
Starting to save early in life gives teens a major advantage because of the power of compounding interest. When savings earn interest, that interest earns more interest over time.
For instance, if you deposit $100 into a savings account each month earning 4% interest, you could save over $6,000 in five years. Use tools like the MoneySmart compound interest calculator to see how your savings can grow.
4. Build an emergency fund
An emergency fund can act as a safety net for unexpected expenses, such as a phone repair or school trip costs. Teens can start by setting aside a small portion of their pocket money or earnings each week.
Pro tip: Aim for an emergency fund of at least $500 to cover minor unexpected expenses and build it up gradually.
5. Learn to budget
Creating a budget is a critical skill. Teens can start by listing their income (allowance, part-time job earnings) and expenses (transport, entertainment, savings). Apps like Pocketbook or Frollo can make budgeting easy and track spending in real time.
A simple budgeting rule to follow is the 50/30/20 rule: 50% for needs, 30% for wants, and 20% for savings.
6. Find ways to make your own money
Earning money gives teens a sense of independence and teaches them the value of hard work. In Australia, teens can explore options like:
- Part-time jobs in retail or hospitality
- Babysitting or dog walking
- Tutoring younger students
- Yard work or car washing in the neighbourhood
- Selling handmade crafts or reselling items online
7. Manage spending habits
Tracking expenses is vital to avoid overspending. Encourage teens to think critically about their purchases. Do they really need that extra pair of sneakers, or could that money go towards a savings goal?
Using tools like bank app spending trackers or writing down purchases in a notebook can provide clarity on where their money goes.
8. Learn the basics of building credit
While credit cards are typically off-limits for teens in Australia, it’s never too early to learn about credit. Good credit habits, such as paying bills on time, can help establish a positive financial history for the future.
Parents can help by explaining how credit works and the risks of high-interest debt. For example, using Buy Now, Pay Later (BNPL) services like Afterpay responsibly can prevent debt traps.
9. Pay your bills on time
Timely payments can prevent unnecessary fees and establish good habits. Whether it’s a mobile phone plan or a gym membership, teens should aim to pay on time.
Setting up direct debits or reminders in a calendar app can help ensure bills are never missed.
10. Start thinking about post-school plans
For teens planning to attend university or TAFE, understanding education costs is crucial. In Australia, many students rely on HELP loans for tuition, but it’s important to understand how repayments work and the potential long-term impact.
Encourage teens to research scholarships or consider part-time work to cover living expenses while studying.
11. Start investing
Investing is a powerful way to grow wealth over time. Teens in Australia can start learning about investing through platforms like CommSec Pocket or Raiz, which allow small investments in ETFs or portfolios.
Pro tip: Begin with a small amount and focus on learning the basics of risk, diversification, and long-term growth.
12. Learn key financial terms
Building financial literacy means understanding terms like “interest rates,” “superannuation,” and “budgeting.” Websites like MoneySmart or books written for Australian teens can make learning easy.
Understanding financial terms can also help teens avoid scams and make informed decisions when it comes to loans, credit cards, and other financial products.
Final Thoughts on Money Tips for Australian Teens
Financial literacy is an invaluable skill that can empower Australian teens to take control of their money and future. By setting goals, building savings, and learning how to manage money effectively, teens can create a solid financial foundation that serves them for life.
What are your favourite money tips for Australian teens? Share them with us!