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How Much Money Should You Have Saved By 18?

The “right” savings amount is different for everyone. Goals are always nice to have though to keep you on track!

teenage-boy-and-girl-depositing-money-at-bank

First and foremost, there’s no set amount of money that a teen should have saved up. Simply put, how much money you have in your teenage years is heavily dependent on your environment, family, responsibilities, local economy, and a dozen other factors outside of your control.

However, if you’re looking to learn about and save more money overall, we get you covered. We will break down some of the average amounts in teen checkings, what to save for, and how to have the big money talk with your parents. Are you ready? Who are we kidding? Of course, you’re ready. Let’s get started.

Why “It Depends” And Questions You Should Ask Yourself

There’s no perfect number that teens have in their bank accounts. There are averages, of course, but those averages are irrelevant to your own bank account. Why? Because let’s say that the average teen has $5,000 saved up, they don’t, but let’s say they do. So, if the average teen has that amount saved, how much of it goes into your own bank account? The answer is none. 

What goes into your bank account is the money you earn and save. It’s better to increase the amount you earn and save than to compare your balance to someone else, primarily because the amount any teen saves is based on variables. More so with teenagers than other demographics. Teens have a government-mandated limit on working hours, job opportunities, and transportation. And that’s just not your fault. 

That said, if you are working or getting a consistent income, then you do have opportunities to save. The best part is that even if you can only save a little, as long you do it consistently, you’ll have quite the savings when you enter adulthood.

How Much Money Does an Average 18-Year-Old Have In Their Bank Account?

Let’s do the math. The average teen works minimum wage jobs, paying approximately $7.50 an hour. $7.50¹ an hour for forty hours comes out to $1,160 every month. Now let’s assume the average teen manages to save 10% of their savings, totaling $116.00 per month for a year. The total comes out to $1,392. We’ll settle on a range of 1,000 to 1,500 in savings on average for each teen.² 

Now that assumes full-time work and little to no financial responsibility. In reality, the average teen likely has far less than 1,000 in their savings. 

For comparison, the average adult has around 5,300 in savings³. Although that number may seem higher, many adults have approximately $2,000 or more in monthly bills.

How to Talk About Savings Goals With Your Parents

Parents all have different perspectives on what they will be responsible for paying for or contributing towards past age 18, so it’s important to have that conversation to know what you’re responsible for as a teen.

If you have parents that are open and honest with their finances, then consider yourself lucky. Full stop. But it’s still a good idea to hammer down the specifics of what they will or won’t pay for once you turn 18. And whether or not you’ll live at home. Here are some ways to open the conversation about parental support once you turn 18.

Make a List

Sit down and figure out precisely what you’ll need help paying for once you move. It’s good to start with the essentials, move into necessities, and then leave the door open for additional support. A good list would like something like this:

  • Rent
  • Food
  • Medicine
  • Cell Service
  • Internet Services
  • Utilities 
  • Car Payment
  • Car Insurance

Prioritize items that are important to you but remember to be flexible about what your parents are paying for. Your parent’s money isn’t your money, and they have no legal obligation to continue supporting you once you turn 18. Basically, checking entitlement at the door betters your odds during the money talk.

Choose a Safe Space

Finances can be a sensitive subject. And historically, talking about money is a bit taboo. For that reason, it’s a good idea to choose a safe, private space where your parents can talk openly about money. You’ll also want to choose a time when they have a few hours free to discuss details. 

Put it on the Calendar

If you come from a blended home or have co-parents, scheduling time on their calendars is excellent. Parents that have blended home, especially those with multiple kids, have a lot on their plate. And parents are only human, which means they can forget things from time to time. Feel free to send them a calendar invite, jot a note on the fridge, or just shoot them a text to figure out the perfect time.

How Much Money You Should Have Saved By 18 For Different Life Scenarios

Regardless of parental help, there are a few specific things you should be saving for as a teenager.

Going Off To College

Studies show that the average college freshman has roughly $1,400 in expenses per month. That includes rent, food, etc. Plus, starting a college semester comes with various expenditures like buying textbooks, parking passes, database access, transportation, and more. 

There’s no set amount you should have stored away for college. But based on money trends, minimum wage, etc. – $3,000 is a good starting point. That amount gives you time to find a job and live until your first paycheck.

Living At Home With a Full-Time Job

Living at home is a great way to save enough money to transition smoothly into college or the workforce. Plus, having a full-time job and a stable address looks good on bank loan applications. Because you’re living at home with no set expenses, there’s no perfect amount to have saved. This scenario is more about the money you can save. Start putting money that would otherwise go to rent into a high yield savings or time deposit account.

Living On Your Own With a Full-Time Job

Living on your own with a full-time job is the ultimate sign of independence. But it’s also a lot more responsibility. As such, it’s important to find a rent that’s roughly 30-40% of your overall income. Any higher, and you’ll start living paycheck to paycheck, making it hard to save money. It’s better to live with roommates, parents, etc than to spend all your money on rent with no savings. 

As for how much you should have saved, make sure you have at least three months’ worth of rent tucked away for a worst-case scenario. 

Financial planning is one of the single most responsible and intelligent decisions you can make. And it’s best to start early. Want more information about smart money moves? Check out our other articles for more information!

Sources:

  1. https://www.dol.gov/general/topic/wages/minimumwage
  2. https://www.ngpf.org/blog/savings/question-of-the-day-what-percent-of-13-17-year-olds-have-a-savings-account/
  3. https://www.marketwatch.com/picks/heres-exactly-how-much-money-is-in-the-average-savings-account-in-america-and-psst-you-might-feel-inadequate-in-comparison-01646168736

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About the Author

Chadhurst Sharpe

Chadhurst Jainlett Sharpe spent over six years working as a personal finance banker. He's passionate about giving young minds the tools and resources they need to succeed with money.

Last updated on: April 12, 2022