Three words instigate the ability for teenagers to create their own successful future. Perhaps your imagination is producing words like responsibility, education and employment. Those are certainly good objectives, but the words that increase additional funds at little or no cost are deposits, interest and compounding.


Depending on your age, you may have an allowance or earn money from a part-time job. Deposit a portion of what you earn into a savings account. Shop around for the right bank or financial institution before opening an account. Things to take into consideration include:

  • No service fees (Why pay the bank to hold your savings?)
  • Convenient hours of operation (It’s easier to make deposits.)
  • Customer-friendly staff
  • Pledge to deposit a specific amount at a specific time. Feel free to add to your designated deposit whenever you can. Just the initial money you place in your account will grow into an exciting nest-egg.


Banks pay interest on savings accounts because they loan that money to other customers. It’s an incentive that gains customers and gives them a reason to save. Simple interest pays a specific percentage on your actual deposit.


Compound interest offers an additional incentive. While deposits build your savings account, interest earned on your account for the previous period counts as principal the next time interest is paid. Compounding is a perpetual cycle that treats savings and interest equally. It results in a higher balance that shows the benefit of continuing regular deposits.

At times, a parent, grandparent or other relative starts a savings account for the newest member of the family. Teens should talk with the family about changing the account to one with a higher rate of interest and/or compounded interest. Present the details provided by the financial institutions you’ve talked to. Have the data in order. Your parents will see you’ve done your homework and found a way to add to the balance.

Encourage relatives to put part of the money usually spent on birthday presents and other special gifts into the account. Share your long-term goals so they understand what you’ve learned. A steady record showing your deposits showsyour commitment and the ability to resist the temptation to withdraw funds.

A savings account teaches that we can’t always have what we want right away. Instead of getting trapped in a myriad of debt through a loan, you understand why it’s important to save towards a goal. The lesson of earning interest on your savings because others pay interest on loans is a valuable lesson.

Speaking of lessons, you’ll learn to use the tools offered by financial institutions. Analyze costs and the value of stocks and IRAs. Compare interest rates before making financial decisions. Fiscal responsibility will help keep your savings account growing until it’s time to be used.