Save now, spend later
September, 2025
Graphic: Charley Hu
Retirement accounts use compound interest, which accumulate much faster than simple interest. This is extremely beneficial for savers.
According to a 2024 survey from the Bank of America, only one in five members of Gen Z deposit funds to a retirement account.
This phenomenon isn’t ungrounded. After all, retirement appears a lifetime away for most teenagers. However, starting to think about long-term uses for your money now can mean gaining hundreds of thousands of dollars in interest later on. Additionally, building good saving habits can also help with more short term milestones, like your first downpayment for a house or car. Although saving for retirement seems intimidating at first, more of PHS’s employed students should begin.
To get started, the Roth IRA is a well-suited account to the interests of students. Roth IRAs are individual retirement accounts allowing for monthly contributions of up to $7,000 a year. This account’s advantage is that contributions can be withdrawn at any time with no tax or penalties, creating a compromise between saving and spending.
If you are interested in setting up a Youth Roth IRA, here are the steps you and your parent/guardian can take:
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To have a Roth IRA account, you must earn taxable income. For your income to qualify as taxable, it needs to come from formal employment via a W2 part-time job or self-employment that is registered at the IRS.
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Work with your parent/guardian to open an account at a bank or a brokerage firm. The account should be a custodial IRA in your name, with your parent as the custodian.
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Decide how much of your paycheck you want to contribute each year, and which stocks you’d like to invest in. Parents can also deposit money as long as it doesn’t exceed your income and stays below the $7,000 yearly limit.
Of course, Roth IRAs are just one of the many options available for students to think about! Please remember to do your own research and talk to an adult about what may be suitable for your particular needs. Regardless of the method you choose, starting to save some of your hard-earned money now can help boost you toward financial stability later in life.