Teenage Money Management can be a difficult concept to teach. Check out these Teen Budgeting Tips to help!
The teenage years are about transitioning from a carefree childhood into responsibilities and adulthood. With new experiences comes new lessons, for example, learning to manage money.
It is never too early to learn about managing money, so if you are a teen who is getting ready to begin your first job or a parent with a teenager, you are going to want in on a little teen budgeting 101. Take a look at these ten budgeting tips for teens.
Teen Budgeting 101
#1. Track Income
You cannot correctly budget without keeping track of how much money you make. Income isn’t just how much you get paid for working shifts after school. Include your total income, even if it’s only money from doing chores around the house or babysitting. Add it all up to get a good idea of how much money you make each month.
#2. Make a list
Making a list of financial responsibilities is an essential part of budgeting. Track each purchase, whether it is an impulse buy or an absolute necessity. Tracking is a great way to help you see where your funds are going. There are even some apps for this to make it easier.
#3. Divide Wants From Needs
Now that you have made a list of your purchases, it is time to decide which items are a necessary part of life, and which items are pure wants. Doing so can come in handy when it comes time to cut back expenses.
#4. Prioritize
To follow a budget, it is super important that you prioritize. Take care of the essential items, like car insurance, fuel, and your cell phone bill. Whatever money remains after priorities is considered disposable income.
#5. Set Financial Goals
Budgeting is a way to make sure that you don’t run your bank account into the negatives, but it is also a way to help you set aside money toward financial goals. Perhaps you want to save money for a down payment on your first car.
#6. Open a Bank Account
Anyone who earns money should have a bank account to deposit it in. It is a good idea to have two separate accounts, one for spending (checking), and one for setting money aside (saving).
#7. Use Cash Only
The ease of using a credit or debit card can be incredibly enticing; however, refrain from doing so. Using cash for purchases is a sure fire way to keep track of how much money you truly have. It can also prevent you from making impulse purchases when you don’t have the cash on hand.
#8. Consider the Envelope System
The envelope system is a way of keeping your money, and your budget organized. Have an envelope for each category of your budget (bills/necessities, savings, gifts). When you cash your weekly check, divvy it up into the envelopes, and make sure that those envelopes are used strictly for the purpose listed. Spend as you normally would, but use the cash from the envelopes. When it is gone, the money in the budget has been exhausted for that period.
#9. Revisit Your Budget
Budgets are not permanent. Nor will you always bring in identical amounts of money each month. Your financial needs will not forever remain the same. You need to make sure that you are revisiting your budget, and adjusting it when the unexpected happens.
#10. Have a Chat
If you are a teen reading this, don’t be afraid to ask your folks, or another trusting and responsible adult about financial questions you have! You can even head into your bank because as you know, they are full of all sorts of financial knowledge!
The thought of budgeting can be scary, but you have nothing to fear. The sooner you get the hang of it, the better off you will be! Just keep track of your financial decisions, and always be sure to keep your future in mind as you make purchases.
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Questions? Comments?