One of the most significant regrets people have regarding their finances is that they wish they had begun saving earlier. The best way to achieve this is to begin budgeting early. Budgeting even as a teenager can make a big difference in your life right now and in the future.
Here, you will learn why you should budget early, and everything you need to know about budgeting for teens.
These budget-planning strategies are relevant for anyone at any age, whether you’re a teenager or a senior citizen. Whether you’re many years away from your 18th birthday or are already past it, these suggestions are useful to you.
The importance of budgeting for teens
Budgeting as a teenager is more than the money in your bank account right now. There are many more important reasons why you need to start budgeting early.
Get in the habit early
One of the biggest challenges of changing your financial state is changing your lifestyle. Unfortunately, many people are farther along in their lives when they try to make a change. And once they’ve created poor financial habits for many years, they have reached a point of no return.
By managing your budget early on, you are establishing habits that you will likely continue for the rest of your life and will help build your financial future. You must build positive financial habits as a teenager.
Start saving for long-term goals
Budgeting as a teenager is more than just the ways you establish, but also about what you can achieve for the future.
As your adult years progress, you will discover that there is a long list of big expenses incurred during this period of life, including the cost of college, purchasing a house, taking a trip around the world, and starting a family. Unfortunately, many people are simply not prepared for these costs.
The typical college student graduates with about $29,900 in student loans, between private and federal loans. Furthermore, about 14% of the student body had parents take out parent PLUS loans, averaging an additional $37,200.
You can start saving money by budgeting from an early age. This will ensure that you are not saddled with significant debt when you enter adulthood.
Learn financial literacy
Financial literacy has declined significantly in recent decades. In 2019, only 34% of participants could answer four out of five basic financial literacy questions correctly.
The drop was the greatest among younger Americans ages 18 to 34. As a teen, you should familiarize yourself with fiscal matters so that you’ll become financially literate later in life.
Budgeting tips for teens
Ready to budget as a teenager? Here are the steps of how you should create your budget and then actually follow it.
Understand your income
The first step is to figure out how much money you earn each month and where it comes from. As a student, it’s quite possible that you earn some money from a part-time job or your parents.
But where it comes from, it’s critical to know how well you’re paid. If your pay varies month-to-month, try to establish a standard from month to month. We have some excellent ideas on how to make money as a teenager.
Choose the right bank
When you’ve earned enough income and can afford to make a deposit, it’s important to pick a good bank for you. There are many options to choose from, including regular banks, online banks, and credit unions.
You can start by looking into the bank your parents use, but be sure to do further research on the features that are important to you. A checking account is useful for your regular spending, while a savings account is useful for your savings.
Create your budget categories
The next step is to set a budget category for yourself. In other words, where is your money going every month? As a teenager, you may not have much in the way of expenses such as rent, food, or healthcare yet. Your expenses may also include gasoline, car insurance, after-school activities, outings with friends, and savings for the future.
Save and invest as much as you can
It is unreasonable to underestimate the benefit of saving money. I think most people would agree they wish they’d saved more during their youth.
Save more income during these days of having fewer expenses. We will describe some of the best money-saving opportunities for teens.
Budget for giving
It is invaluable to help others. As a young person, you can help charities that are important to you by donating a portion of your income. A little can go a long way.
It’s not just for the benefit of others; donating money has been shown to give people greater pleasure than giving time.
Track your spending
Once you’ve determined your budget categories and you know how much you want to save, your job isn’t over. It’s important to track your expenses, as you only will know if you’re staying on budget if you monitor your spending.
The easiest way to track your expenses is to use a budget app that connects to your bank accounts to record each transaction. Popular budgeting apps include Mint and You Need a Budget.
Set financial goals
Setting financial goals is a great way to be intentional with your money. When you know how much money you have to spend, you’ll be more motivated to stick to your budget, even if you don’t particularly feel like doing so. Financial goals for teens may include anything as large as college tuition and as small as a new high-tech item.
Adjust your budget for life changes
Your life will change so much over the next several years, and as you grow up, your budget must adapt too. As you experience life changes, adjust your budget to take account of new earnings, new expenses, and new financial goals.
Find ways to increase your income
In your teens, you may have a constrained amount of time to work and play a limited amount of money. Much of your time goes to school and you may only work limited hours.
However, you still do have some options when it comes to making money, such as mowing your cousin’s lawn or working at a local restaurant.
Learn from your mistakes
As a youth, I assure you that you will make financial mistakes. In fact, you will likely continue making financial errors as an adult. However, mistakes do not equate to failure.
Instead of dwelling on your financial mistakes, study them to learn for the future. Rather than bragging about your financial successes, use your success as motivation to push yourself further.
The Bottom Line
Budgeting is one of the most important things you can do to take charge of your finances and improve your future. Most people don’t budget until later in life and aren’t motivated to start until they hit financial hardships.
As a youngster, you can save a lot of money and attain many of your goals. You’ll also feel confident about handling your finances by the age of 19.