Money may seem like the least of priorities when you’re in the throes of youth, but the earlier you start, the better will your future look in terms of finances.
It would be a bit of a stretch to call today’s teens young and foolish. They probably have it much harder than most of us did when we were teenagers. Notwithstanding the pressure to look a certain way that social media imposes on them when hormones are throwing their bodies out of whack; there is also the added pressure to grow up to become “an achiever” and “live the dream”. There’s a ton of advice out there that tells teens about how leading a disciplined life will get them closer to their goals or how they can ace juggling studies and extra-curricular activities. However, advice on how to start early when it comes to managing their finances is probably few and far between.
We’re going to share some easy tips on how as teens you can start saving early and maximise the money you make:
Understand Your Income:
As a teenager, while it may be hard for you to have a steady flow of income, you can still earn some money on the side through part-time gigs or by taking up jobs that offer you quick money like babysitting, taking your neighbour’s dog for walks, tutoring etc. In India, getting cash gifts during Diwali, birthdays etc. is a pretty common practice. Instead of using up this money to buy yourself the latest phone or gadget, you should consider putting all of it in a Fixed Deposit that will offer you high returns later.
Additional Reading: Money Advice For The Parents Of A Teenager
Project Your Expenses:
As a teenager, you’re likely to have monthly expenses like mobile phone bills, tuition fees, recreation expenses, grooming costs (haircuts, clothes etc.) etc. that you will need to plan for if you’re into a part-time gig that offers a steady income. Bearing in mind your monthly income, if you plan and budget for these expenses, you should be able to cover for them on your own, without begging your folks for money. Some of those expenses will differ every month, so when you’re planning a budget, ensure that you have factored in miscellaneous expenses as well.
Once you have a budget earmarked for your expenses, try to stick to it no matter what. This will help keep your unplanned expenses in check. The older you grow, the more your expenses will multiply. And while being able to afford what you always dreamt of buying may seem like a possibility now, it’s wise to keep off of it unless there is a real need for the purchase. If you have an add-on Credit Card, try not to incur expenses on it unless you can pay it off entirely by yourself. Outstanding payments on Credit Cards can be really expensive and you shouldn’t have to look to your parents for a bail-out.
Additional Reading: Tips To Prep Teens For Better Finance Habits In The Future
Save For It If You Really Want It:
A good part of your teenage years will be spent on making goals for nearly every stage of your life-higher studies, career, marriage etc. While you’re planning for these phases, don’t leave your financial goals out of the picture. It’s best to start early when it comes to establishing long-term goals. Be it your first car, your own house or being able to start your own business, start planning financially for these goals as early as you can.
Divide And Rule:
If you’re at sea about how much money you should set aside for expenses and your personal financial goals, one easy way to go about it is to follow a 50/20/30 rule for your expenses. Contribute 50% of your net income to any fixed expenses, 20% towards savings and the other 30% towards any form of leisure/recreational expenses. Sticking to a set rule will allow you to develop a disciplined approach towards your finances.
Additional Reading: Financial Incest And How It Can Affect Your Children
When you’re in your teens, you may still have a whole lot of years ahead of you to plan for your future, but the earlier you start, the better it is. So, while you’re prepping for your career and life goals, don’t give your financial goals a miss.
Need help with saving? We can help!