Money Management for Teens
Using Budgeting, Planning, and Smart Shopping to Manage Finances
If you make decent money and aren’t sure where it’s all going, you may need some help with managing your money. This is a useful skill that will come in handy as you grow older and have (hopefully) more money to manage. Get into these practices now so they become second nature to you.
Make a Budget
Create a budget and stick to it. Write down all of your expenses either on a weekly or a monthly basis, and how much each item or area costs. Don’t forget to include cell phone plans, eating out, clothing purchases, gas (if you drive), entertainment, and pocket money for incidentals. If the totals don’t add up to your weekly or monthly income, you may need to cut back in a few areas. If you have more money coming in, you may be able to spend more in a few areas. Make sure it’s a budget you can live with, and make sure something is “in the budget” before you buy it.
Keep Track of Purchases
This is perhaps the single most important step one can take in getting spending under control. Often, people spend more money than they realize throughout the course of a day. A few dollars here and a few dollars there can really add up. Carry a small notebook with you and record all of your purchases for a week. Be sure to write down the date, what you bought, and the amount spent. At the end of the week, review your purchases. You might be surprised to find that you spent thirty dollars on coffee or convenience store food.
Avoid Impulse Spending
If it’s not in the budget, think twice about buying it. Use your purchase record to determine if you are spending a lot of money on items you decide to buy “on the spot” that you really didn’t plan on buying. Impulse spending may be eating up a lot of your money.
Plan for Big Purchases
That new ipod or cell phone might seem out of reach because of the high ticket price. However, once you get your everyday spending under control, you may be pleasantly surprised to discover that you can afford some of those luxury items you want. One strategy: decide how much money you can save elsewhere during the course of a week (maybe ten or fifteen dollars), then determine how many weeks it will take to save up enough money. Using the item you really want as a motivator may help you save even more.
Avoid Credit Cards
You may start receiving offers for credit cards as you get older. Be very wary of these, as they usually charge very high interest rates. Though credit may seem convenient, it is easy to get carried away and wind up charging more than you intend to. Keep in mind that people often spend more when using a credit card than they would if they used cash for the same transaction. Many young people (and adults, too) get in trouble overusing credit, and wind up owing lots of money and damaging their credit rating in the process.
Use Cash Machines Carefully
Cash machines are convenient, almost too convenient. If you use these, be sure to track and record your withdrawals carefully. Again, you may be withdrawing (and spending) more than you realize. You also run the risk of overdrawing on your account or bouncing checks if you don’t keep accurate track of your cash machine usage.
With a little time, attention and practice, you can become skilled at managing your own money. By carefully creating and sticking to a budget, watching your purchases, and keeping track of how you spend your money, you will develop valuable skills that will last a lifetime.
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