Why Kids and Teens Should Start Saving and Investing Early

September 22, 2025

Ask most adults if they wish they had learned about money management sooner, and you’ll likely hear a resounding “yes.” Financial literacy is a life skill that pays dividends over time—and the earlier it starts, the more powerful it can be. Helping kids and teens save and invest even small amounts of money can lay the foundation for lifelong financial confidence.

Why start so young?

The real advantage of investing early is time. When savings have decades to grow, compounding can turn small contributions into substantial balances. Consistent saving, combined with a growth-focused investment approach, allows money to work harder.

Consider this: someone who begins saving $500 per year at age 13 and gradually increases contributions over time may accumulate far more than someone who waits until their mid-20s to begin—even if the later saver contributes more each year. The difference is simply the power of starting early.

And it’s not just about retirement. Early saving habits can also support goals like paying for college, buying a first car, or saving for a future home.

Two examples of early vs. later saving

Let’s imagine two savers:

●     Early Saver – Begins saving $500 a year at age 13, continues small contributions through high school, and increases amounts as income grows.

●     Later Saver – Waits until age 25 to begin saving, contributing the same $500 each year.

Assuming a 7% average annual return, the early saver could end up with more than double the account balance by age 67 compared to the later saver. While these numbers are hypothetical and actual returns will vary, the lesson is clear: time in the market matters more than timing the market.

Ways kids and teens can begin

Parents and guardians have several options to help children and teens take their first steps toward investing:

1.    Youth brokerage accounts – Some firms now offer accounts designed specifically for teens, giving them the ability to make their own investment choices with parental oversight. These accounts often come with educational tools and can be a great way to practice investing in a safe environment.

2.    Roth IRA for kids – If a child has earned income from babysitting, lawn care, or even part-time work, they may be eligible to contribute to a custodial Roth IRA. Contributions can grow tax-free, and while the money is intended for retirement, certain withdrawals (like for education or a first home) can be made without penalty.

3.    Other savings vehicles – 529 college savings plans, custodial accounts, and other options can also play a role depending on a family’s goals.

Building good money habits early

The goal isn’t just about building wealth—it’s about building confidence and responsibility. Giving kids hands-on experience with saving and investing helps them see the long-term benefits of setting money aside today. It also teaches them to think about trade-offs, goals, and how to make informed financial decisions.

A note of caution

Investing always involves risk, including the possibility of losing money. Market performance is unpredictable, and contributions should be made with a long-term perspective. Still, the earlier kids learn this reality, the better equipped they’ll be to make smart choices throughout life.

The bottom line: The earlier kids and teens learn to save and invest, the more time their money has to grow—and the stronger their financial foundation will be. Starting small today could set them up for success tomorrow.

Sources:

https://www.fidelity.com/learning-center/personal-finance/can-kids-invest-in-stocks

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.