Helping Teens Start on a Strong Financial Path

November 10, 2025

Supporting your teenagers and adult children as they begin managing money on their own can create a meaningful head start for their future. Even small steps taken early can compound into a significant advantage over time. Here are several practical ways families can help younger generations build healthy financial habits and long-term savings.

1. Consider the Benefits of a Health Savings Account (HSA)

For young adults covered under a high-deductible health plan, a Health Savings Account (HSA) can be a powerful tool for long-term savings. HSAs offer three key tax benefits:

●     Contributions may be tax-deductible

●     Savings can grow tax-deferred

●     Withdrawals for qualified medical expenses are tax-free

Children can remain on a parent’s insurance plan until age 26. If your adult child is covered under a qualifying high-deductible plan and you cannot claim them as a dependent, they may be eligible to open an HSA in their own name. Parents can contribute to the account, though the tax deduction applies to the child as the account owner.

Because medical expenses are something everyone will have, building an HSA balance early can provide flexibility and financial security later in life.

2. Start a Roth IRA—Even for Younger Earners

A Roth IRA can be an excellent starting point for young savers. As long as your child has earned income—whether from a summer job, part-time work, or gig labor—they can contribute up to the annual limit.

For minors, a custodial Roth IRA can be opened and managed by a parent until the child reaches adulthood (typically 18 or 21, depending on the state). Contributions are made with after-tax dollars, and withdrawals in retirement may be tax-free if certain rules are met. In addition:

●     Contributions (not earnings) can be withdrawn at any time without taxes or penalties.

●     Up to $10,000 in earnings may be used toward a first-time home purchase without penalty.

This flexibility makes the Roth IRA a powerful long-term planning tool—even before a full-time career begins.

3. Use 529 College Savings Plans Strategically

529 plans are designed to support education goals, and savings grow tax-deferred. Withdrawals may be tax-free when used for qualified education expenses, which can include:

●     College and graduate programs

●     Certain K–12 tuition expenses

●     Apprenticeship and vocational training programs

●     Student loan repayments (up to a lifetime limit)

Starting early gives these accounts the most time to benefit from market growth. And if funds aren’t fully used, current law allows certain unused 529 balances to be rolled into a Roth IRA for the beneficiary—up to $35,000 over a lifetime—subject to specific rules. This added flexibility may help reassure parents worried about “overfunding” education savings.

4. Help them Establish and Build Credit

A strong credit score can make a meaningful difference when renting an apartment, buying a car, or obtaining insurance. One simple way to help a young adult begin building credit is to add them as an authorized user on a parent’s credit card. The primary account holder remains responsible for payments, but positive payment history can help the young adult establish credit in their name.

This approach works best when paired with clear expectations and good communication around spending.

5. Encourage Hands-On Financial Experience

Real experience goes a long way in building financial confidence. A teen or young adult brokerage account—where the young person can invest with guidance—can help reinforce lessons about saving, risk, patience, and goal-setting.

The goal isn’t to pick the perfect investment—it’s to learn how investing works and why starting early matters.

6. Consider Custodial Accounts for Gifts and Inheritances

For money gifted to a minor—whether from family, allowance, or earnings—a custodial account (UGMA/UTMA) allows an adult to manage the assets until the child reaches the age of majority. These accounts:

●     Provide investment flexibility

●     Have no contribution limits

●     Must be used for the child’s benefit

●     Transfer to the child automatically at adulthood

Earnings in custodial accounts may receive favorable tax treatment, though the “kiddie tax” rules can apply—so it’s wise to consult with a tax professional when needed.

Setting the Next Generation Up for Success

The most valuable lessons often come from modeling good habits: budgeting thoughtfully, saving consistently, investing patiently, and talking openly about money. Helping young people practice these skills—before major life responsibilities take hold—can lay a strong foundation for financial independence and long-term stability.

Small steps taken today can shape financial confidence and opportunity for years to come.

Sources:

https://www.fidelity.com/learning-center/smart-money/parenting-tips

Disclosure:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.