While the ever-changing status of the world is hard to predict these days, there’s always one thing you can count on: how to manage your money. As a teen, you don’t have as many responsibilities as the adults in your life, meaning less bills to pay. This can make it a lot easier to save your money, or contribute to the household as you and your parents see fit. Starting out now is the best way to build yourself a strong foundation for your future.
Budgeting is the cornerstone of good financial management. It may not feel like the most exciting or glamorous aspect, especially when you first create your budget! Still, it’s the best way to make sure you’re on the right path to getting the results you want. First, start with sections such as Food, Clothes, Gas, Savings, and Fun. You can go into more detail, such as Games, Books, Phone Accessories, Travel, and any other categories that don’t fit into the main ones. While your parents may pay for most or all of these categories right now, it’s still good to be able to visualize how much money goes into each section.
So, once you have your sections, figure out how much money you get each month (from your job and/or parents). Then set spending limits for each category – the total should not exceed your income. For example, say you get $200 a month. Your budget may look like this:
- Food: $40
- Clothes: $50
- Gas: $20
- Savings: $30
- Fun: $60
You can have as many or as few categories as you want, so long as you don’t go over $200 total. In this example, the Fun section has the most money, so we may say that your parents are paying for the major things. Perhaps the food you buy yourself is when you go out with friends, or the clothes you get are extra while your parents supply you with your everyday clothes. In the future, you will also need to include things like Rent, Furniture, Insurance, and more that you have to plan for when moving out of your parents’ house.
For now, the more money you put into your savings every month, the better prepared you’ll be for any financial emergencies in the future. Hopefully you’ve already been saving some portion of any money you receive, starting with birthdays or other holiday gifts, and continuing with allowances or jobs. If not, now’s a good time to start! Try to save at least 50% of any income you receive, especially now when you have less bills to account for. You want to build up your savings account so that when you are an adult, you have enough money to cover 1-3 months if there is an emergency and/or you are out of a job. Your savings can also help pay for college, a car, and other big-ticket items that your parents may not be able to completely cover for you.
If you need more help, there are plenty of budgeting apps and other financial tools that are free. Find one that suits your needs best, even if it’s just writing it out on paper because that’s easiest for you to visualize. Practice your money management now and prepare yourself for later, when a strong foundation will help you get ahead in life.