7 Teenage Money Management Tips
As a teenager, money management may not be your strength. Really, you may not even know where to start. Teenage money management tips aren’t a popular topic in peer groups, and classrooms may not make time to introduce them.
If you have stumbled on this article while looking to learn some stellar money management tricks, you’re already in the right mindset.
There’s a good chance you’re hearing advice about instilling healthy habits, yet an often overlooked healthy habit is teaching money management to yourself.
Financial lessons learned in your early years will be invaluable to you in the course of your life.
Here are seven teenage money management tips that are essential for all young adults to consider.
Money Management Skills for Teenagers
1. Live Within Your Means
Spending more money than you earn is never a good idea, and it’s a great habit to start avoiding this immediately. It’s also highly beneficial for you to start thinking about the long-term from an early age.
Following trends and keeping up with your peers are quick ways to spend money as a teenager. Start to avoid that and don’t get caught up in upgrades, such as a new cell phone.
Instead of making impulse purchases, begin educating yourself about the funds you’re going to need for your first car, college, and then the kind of money you would need to raise a family in your town or city.
It also isn’t too early to start thinking or even planning for retirement as the power of compounding interest will greatly benefit you in the long term.
Equipped with such information, you are more likely to convince yourself that you shouldn’t be overspending and that you should be looking for economical purchases rather than splurging on items, although we all need to have some fun sometimes.
Learn about the dangers of debt, such as student loans, which can ride heavily on your shoulders for a long time.
It is important to note that the average debt of students when they graduated from college in the U.S. rose from $18,550 (in 2004) to $28,950 (in 2014), an increase of 56 percent, and total student debt in Canada is at least $18 billion nationwide. The ever-increasing student debt is a cause for alarm for teenagers all over the world.
Preparing yourself for the future by building good habits will likely shield you from the various side effects of bad debt.
2. Start a Budget
Budgeting is essential for effective money management. Learn how to draw out a monthly budget for all costs and expenses, then compare it to your income.
Once you have prepared your money management budget, having the willpower to stick to it is vital to its success. Having support along the process helps, and involving your parents can help you stick to a plan. Have a check-in at various points in a month to keep reminding yourself to stick to your budget.
At the end of each month, perform a comparison of goals and spending. This involves comparing the budgeted values with the actual values. Did you stick to your budget? Be firm with yourself and try to overcome these variances in the coming months.
Over time, you will see how good you will get at sticking with the budget you’ve planned for yourself. It might even be a good idea to give yourself a small treat at the end of a successful budgeting period. Don’t forget to adjust accordingly if your needs change.
3. Sign Up for a Money Management App
As a teenager you’re probably familiar with apps. Chances are that you’re likely going to find budgeting a lot more interesting when done on an app and not on a piece of paper or excel spreadsheet.
Having a budgeting app on your phone will not only make it less cumbersome but will also be a constant reminder to you that you are on a budget.
Here is a list of 25 budgeting apps which both adults and teenagers can use for personal finances.
4. Get a Job
Getting employment that pays will add the money you need to your budget. Not only will having a job instill a sense of responsibility, but it will also give you an idea of how hard money is to earn as opposed to how easy it is to spend.
Having a steady income will allow you the spending money you need in your budget, while also allowing you to save money for your future.
If you do not have a job just yet, this doesn’t mean that budgeting is not important. Whatever your income is (even if it’s birthday money), the strategies here will help you in the long run.
When you feel ready for a bigger challenge you may consider starting a side hustle to add some money to your budget.
5. Open a Savings and Checking Account
A good start to learning about personal finance is to visit the bank. A savings account is a must if you’re looking to start a long-term plan. With this in mind, a mind-boggling 29.2% of Americans don’t save any of their income, and Canadians are forecast to save just 3.21% of their disposable income, placing them behind the U.S in savings.
It is important for you to understand the necessity of saving money for rainy days (days you may run into a problem).
A savings and checking account will not only help you balance between saving and spending money, but they also have the following additional benefits for you:
- Online banking will allow you to keep a close watch on your saving and spending
- You’ll be able automate any bill payments, therefore not allowing late payments
- They will allow you to learn personal banking fundamentals and allow you to begin investing your money, thus increasing your financial literacy.
6. Be Wise in Your Friendships
People often underestimate the impact of friendships on their decision-making. As a teenager, it’s not hard to get caught up in your peer group, whether it’s positive or negative actions.
Detrimental habits are not hard to pick up, and often acceptance in a group can blur decisions. Activities such as eating out, shopping, partying, and smoking can quickly deflate your savings.
Think about who you spend the most time with and how their habits will impact your goals. As a famous statement said, we are the average of the five people we spend the most time with.
7. Discuss Household Finances with your Parents/Guardians
Parents, guardians, and other family members are an excellent resource for learning about teen money management. However, 23% of U.S. parents reported that they never or rarely talk to their kids about household finances.
While the primary responsibility of household budgeting falls on the adults, talk to your parents about their decisions, bills, and the processes they go through with their money management.
You most likely have a wealth of information close to you, take the advantage to learn. Parents should never underestimate the importance of discussing money with their teens.
How to Manage Your Money as a Teenager
These teenage money management tips may seem easy to follow, but getting started is the hardest part. It is never too early to teach yourself money management and it is important to know that practice is the key to success.
Creating a budget is a good start, finding a job to contribute to your budget is important, and then sticking to your goals is key. Don’t forget to re-evaluate often.
Budgeting should become a part of your lifestyle and be ongoing. Don’t get caught up in trends, and don’t compare yourself to others, as these are both solid ways to spend outside your budget.