If your teenager earned money from a summer job, you might encourage a practical purpose for some of the money: a Roth IRA. There is no age restriction on Roth contributions as long as the child has “earned income,” such as wages. Contributions for 2016 are limited to the lesser of the earned income or $5,500.

Although tax-free distributions from a Roth IRA generally are not available until the child turns age 59½, these amounts may grow into a sizable nest egg. Also, tax-free withdrawals may be allowed due to disability or for a first-time home purchase (up to $10,000). Finally, your child will learn a valuable lesson about retirement saving.