9 Teenage Money Management Tips Every Teenager Needs to Know
Everyone in this world wants to make money. But what happens if you know how to make money but don’t know how to manage it?
A greenlight study in 2021 shows that 74% of teens feel difficulty and lack confidence in managing money. If you are facing the same issue, then you are at the right place.
In this blog post, you will learn the basics of money management and how to run your financial cycle smoothly.
What Is the Importance of Money Management?
On the first of every month, when I get my pocket money, I feel like the wealthiest person in the world.
I buy Netflix subscriptions and watch movies with friends. Eat my favorite foods and snacks. And, basically, spend money on everything I’ve been holding back for the previous many days.
But in a matter of a few days, I am left with little to no money to pay my academic fees and buy books. And this makes me feel like a beggar.
Well, this is what my life used to look like a couple of months ago.
But then, I learned money management and everything changed.
Now, I manage my finances carefully, and not only am I able to meet my needs throughout the month but also have some extra cash for occasional hangouts with friends while also saving for my future and emergencies.
How You Can Manage Your Money Better?
Money management is an essential life skill. But it is not taught in schools or colleges. You can either learn it through trial and error or from the experiences of others who are good at it.
And learning this in my teenage is absolutely crucial. Because it helps set the foundation for a peaceful financial life.
Here are some of the most important money management tips I have learned during my journey to become better at this skill:
1. Earn Money
To be able to manage money, you must first own it.
You can do it with your pocket money, but it will not give you a preview of the practical world. So, it’s important to make your first earnings as early as possible.
Start a part-time job to be financially independent. It will give you an idea about the importance of money and where it comes from. It will also show you the struggles behind earning money.
And it doesn’t have to be grand either.
Your first job can be as small as editing a single word document or making a PowerPoint slide.
You can even choose something that makes you happy… a hobby that can be turned into a part-time job.
2. Budgeting
Second, you should make a budget and stick to it.
There are two budgeting strategies I like to use:
• 50/30/20 Strategy:
In this strategy, you can limit your needs, like college and hostel fees and other expenses to 50% of your monthly income. 30% to the wants like your favorite food and clothes. And 20% is your savings.
• 80/10 /10 Strategy:
It is a simpler strategy than 50/30/20. In this strategy, you contribute 80% of your monthly income to your wants and needs. 10% are savings. And 10% of your contribution goes to donations.
If you want to adopt a budgeting strategy that also gives you a sense of moral achievement, then 80/10/10 is your best bet. Because charity never lessens your money. It always multiplies.
• Budgeting Tools and Apps:
You can use apps and tools to structure a budget that fits your income. These tools are productive and help you spend smartly. Here is a list of some of these tools:
· Bankaroo
· Greenlight
· Busy kid
· Acorns etc.
3. Savings
It is the basic principle of managing money that the more you save today, the more you will benefit tomorrow.
There is a famous saying that there are two rules for managing money. The first one is never to lose or waste money. And the second one is to stick to rule number one.
I still remember the time when my father was in the hospital. And my mother was feeling stuck managing the money for hospital bills. My savings were not much. But they helped pay for the emergency bills until other arrangements were made.
Here are some ways of saving:
• Open a Saving Account:
Save money by opening a savings account. It will help you to save regularly and keep a track of your savings.
You can divide your savings into parts like you can save separately for your future or your desires.
• Start Saving Today:
Studies show that if a person starts to save $37 every month at the age of 18, they will be approximately a millionaire in his 60s. But if the same person started with the same at 28, they’ll have only $300,000 in his 60s. So, start saving today.
4. Investments
Once you have made enough money through savings, you can invest. And while it could be tempting to spend your money on desires, it’s time to be wise and invest. Investments make a secondary income.
Consider two sisters, Sara and Zara, who saved money. Sara bought a gorgeous dress with her savings, but Zara invested her money. Who will get more benefits?
Zara will later get a higher amount which she can use to buy the same dress with a beautiful pair of shoes.
If you are interested in business, you can invest your money in a small business. Then you can save the money from profit for your future goals.
This small side business will also give you hands-on experience. Later on, when you will complete your degree, you will have enough money and experience to launch your own brand.
5. Set realistic goals
Make realistic goals like buying your car at 25 and making your own home at 30. Realistic goals will compel you to make real efforts.
Avoid making small goals like buying your favorite outfit or a new iPhone. These can be your secondary goals.
If you have saved earlier for your goals, it will save you from debt. And you have to keep yourself debt free for a smooth financial cycle.
6. Separate your needs and wants
A person who does not know the difference between their needs and wants is probably the biggest fool.
Needs are necessities, while wants are the things you can go without but desire. Here’s an example.
If you need a mobile phone, it is your need, but if you wish to have a brand new model, it is your want. But truthfully, you can also manage with a secondhand used mobile phone.
So, when making a buying decision, it’s important to differentiate between your wants and needs.
7. Track your spending
Always check the prices of products before buying products. Wherever you go for groceries, make a list first, and don’t buy unnecessary things.
See and find out where you have spent more. Do you need that? Are they extras?
A common way to judge is the 72-hour strategy.
If you want to make a purchase. Stop and wait for 72 hours. After 72 hours, if you still need that thing, then go for its purchase.
8. Be a clever shopper
Here are some ways you can shop smart:
• Use Student Discount
You can use student discounts in restaurants and shops. You can also use student cards for special offers at many places.
• Use Public Transport
Never go for a taxi ride in your teenage years. Using public transportation is much cheaper.
• Compare Prices Before Buying
Check the prices of products on different brands and stores before buying.
9. Stop Wasting Money
Here are some ways to avoid wasting money:
• Cook food for yourself. Don’t buy food from canteens. It is very expensive as well as it will harm your health. Cooking food for yourself will be fun.
• You can buy cheaper Netflix subscriptions. After all, it is a distraction in your studies. A cheaper subscription will save both your money and time.
· Ask your seniors for old books instead of buying new ones. You can also read them in libraries and online if they are available.
· It’s not necessary to go to a fancy party. You can go to parks and enjoy picnics. Believe me, you will enjoy natural places more than a party.
· If you are addicted to listening to songs and attending regular concerts, try to avoid it. You can use Spotify as it will be much cheaper with a great listening experience.
Here is a bonus tip, one for boys and one for girls.
For Girls:
Most teenage girls waste their money on beauty products. At this age, their skin can get damaged due to heavy formulas in beauty products.
You can avoid such products as they will save your skin as well as your money.
· Use natural products for healthier natural skin.
· Improve your diet for a glow that comes from within.
For Boys:
Most teenage boys love gaming. While you try to manage money better, you can install free gaming apps on your phone and make do with them.
Pro Tips:
- You can earn through these games in your leisure time.
- You can also participate in contests and win prizes.
Conclusion
I know it’s hard for teenagers to manage money. But it’s certainly not impossible.
All you have to do is to switch from a luxurious lifestyle to a simpler one. Start your journey today. Don’t wait for tomorrow.
Which was your favorite tip from this list? Did we miss your favorite hack? Let us know in the comments!
