7 Ways to Save Money as a Teenager
This is a guest post by Financial Wolves, a blog about making money with side hustles to help you achieve financial freedom.
While some teens are lucky enough to have their parents fund their expenses, not everyone has that luxury. From new PlayStations to the latest MJ sneakers, there are many things your parents won’t pay for.
However, you can if you start saving your money. If you don’t know how don’t worry – there are many ways that can help you save money as a teenager.
To help you learn some easy ways, we’ve come up with this short guide.
What’s the Ideal Age to Start Saving Money?
According to recent studies, about 83% of American teenagers don’t know how to manage money. Well, money management begins when you know what’s the right time to start saving money.
Most financial experts say you should start saving as soon as you get your first job. The US Bureau of Labor Statistics reported an increase in employment for the 16 to 24 age bracket from 2.4 million to 21.2 million in 2019.
The report shows that many teenagers begin their first jobs at the age of 16. Consequently, if you’re already making money (whether it’s through a traditional part-time job or creative entrepreneurial projects), you should start saving immediately instead of leaving money management for the not-so-distant future.
Why Save Money as a Teenager?
There are many reasons to start saving money as a teen. For one, it’s a good habit to get into, especially when you start your career. For another, you learn about financial security, which is something lots of people (even adults) don’t know very well.
Saving money allows you to:
Be more financially independent (you don’t need to ask your parents if you need money unexpectedly)
Save up for bigger purchases instead splurging on many smaller ones (for example, going on a trip or buying an iPhone)
Also, save for college or school tuition/expenses
Learn how to plan and set goals
Lastly, find out how to deal with banks and learn bank terms such as simple/compound interest
Seven Ways to Save Money as a Teenager
Moving on, let’s get to the point. Now that you know why it’s important to save money, what are some ways you can do it?
It’s not hard, so you don’t need to be wary. It’s a simple process of planning and keeping certain goals in mind. Although, before you look at our tips, think about why you want to save money. This will help structure your finances and aid you in deciding what steps to take.
However, if you’ve already done that, here are seven ways to save money as a teenager:
Keeping Check of Your Expenses
Of course, our parents take care of necessary expenses (food, shelter, clothes) when we’re teenagers. However, unnecessary expenses (such as paying for a night out with friends) are left up to us.
Make a detailed account of how much you make and how much you spend every month. Once that’s done, think about how you can curb those expenses. We recommend making an excel sheet to make it easier to keep track. Alternatively, you can try apps like Good Budget and YNAB. (Here is a basic budgeting system you can use to get started).
Learn More About Personal Finance
As mentioned, even adults lack proper financial literacy in the US. Consequently, it’s up to you to educate yourself. Get some books on financial literacy or take an online course. For example, Coursera has some free courses you can take.
The old saying is correct: knowledge is power. If you know how to handle expenses, you’re less likely to make financial mistakes.
Open up a Savings Account
Savings accounts are very useful. Even if you’re saving $10 per month, it’s a good start, and it prevents you from recklessly spending money. How does one open a savings account? Well, it’s very easy.
Go to a bank (most of which have special packages regarding minor savings accounts) and get references to the fees and requirements. Usually, they just ask for identification and parents/guardians’ approval if you’re under 18.
Select a Portion of Your Check to Spend
Of course, if you’re going to save, you need to decide how much. You can use a savings calculator to decide what percentage of your paycheck you should save.
For this, refer back to the first step: keep track of your expenses. As per your expenses, how much money do you need out of your check and how much can you leave for the savings account. Think about these factors.
Get an Extra Mode of Income
This is a classic step in financial management: have dual modes of income. In this way, you get to save more money. However, only get a second job if you can. Don’t compromise on your studies, extracurriculars, and other responsibilities.
One thing almost everyone can do is pick up a few extra chores around the house. Many parents don’t give money as is but reward hard work. If you do that, you have another source of income. There are plenty of ways to earn small income on the side. You can use survey sites to make easy money. It won’t break the bank, but every small amount helps.
Use Discounts Where You Can
If you’re going to spend, spend wisely. Buy things at sales or thrift stores rather than at full-price. Utilize coupons and buy-one-get-one-free offers as doing so helps you be more frugal.
Also, you can use your student status to take advantage of student discounts. Many places, such as cafes and theater parks, have student nights, making them better hang-out options.
However, don’t spend on something you don’t need. You can probably manage without the latest Kate Spade bag or MJ sneakers. It’s better to save for something big like college. These apps will give you free money simply by signing up.
Focus on Summer Jobs
Lastly, getting multiple summer jobs is a good way to save money for the fall. Since school is off, everyone is free for a solid three months. That’s why employment rates skyrocket in the summer months.
Working is a productive way to spend your vacation, and it looks good on college applications. While it’s important not to overexert yourself, you can still work at least two jobs in the summer. If you want to earn extra income, think about ways to make money while at school to earn a few extra bucks.
In essence, it’s not hard to save money as a teenager. By applying these simple methods, you can start saving lots of cash. Whether it’s for college or something else, saving money is very important. It teaches you how to handle money more responsibly, which is a lesson you’ll be grateful for in your adult life.
Being financially capable is a strong asset to take into adulthood. Consequently, we strongly urge you to try out some of these techniques and start making money saving a habit.
Author Bio: Financial Wolves is a blog focused on helping you make more money to achieve financial freedom. After repaying student loans, I’ve shifted my focus to make more money from side hustles, real estate, freelancing and the online economy. Follow us on Twitter and Facebook.