Everyday Money Habits · Checklist
Open a teen Roth IRA, step by step.
A custodial Roth IRA is one of the most powerful accounts a working teen can start, because decades of growth do the heavy lifting. Work down the list — check each box as you go.
Open a Roth IRA with a working teen — confirm earned income, set an amount within the limits, and fund the first contribution.
A teen earned money this year and you want to turn some of it into a lifelong head start.
1Confirm earned income
Your teen earned money from work this year — a paycheck or self-employment. Allowance, gifts, and birthday money do not count. No earned income, no Roth.
Keep as proof of earned income- Pay stubs or a year-end W-2 from an employer.
- For cash or self-employment (babysitting, lawn care): a simple log — date, who paid, how much.
2Pick the amount
The most they can put in is the lesser of what they earned and $7,500 this year. For almost every teen, what they earned is the smaller number — so that is the cap.
What they earned this year$This year’s contribution$The contribution can never be larger than what they earned. That earned number — not the IRS limit — is the real ceiling for almost every teen.
3Choose a custodian
Pick a brokerage that offers a custodial Roth IRA (most large ones do, with no minimum). You open and manage it; the account is in the teen’s name.
4Open the account
Open the custodial Roth IRA online. You’ll need the teen’s Social Security number and a few minutes. Control passes to them when they reach adulthood in your state.
5Fund it
Move the contribution in. The cash can come from anyone — many parents match what the teen saves — as long as the total never tops what the teen earned.
6Invest it
This is the step people forget: cash sitting in the account is not invested. Choose one simple, broad fund so the money can actually grow.
Reflection
Why starting now matters — in your teen’s own words:
Based on the Teen Roth IRA guide.
michaelwestfinancials.com · © 2026 Michael West Financials · Education, not financial advice · Last reviewed June 2026