Growing up is all about making difficult choices, and the quicker you make them, the better the future will look. If you are a teenager or have one in your household, here are some handy tips to help them learn to budget.
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Understand your income
Making money as a teenager is a wonderful feeling, but eventually, you will know enough that what you have been told and what you are actually earning are two entirely different things.
For example, when you get a paycheck, you need to know how much money you receive before and after taxes. This is known as the distinction of gross income from net income. As a result, you will know how much money you actually get from any income that you have earned.
When you establish this, add any income that does not include tax deductions, such as tips, gifts, incentives or allowances. To be on the safe side, if these numbers differ over time, add up the profits you have earned in the last few months and then divide the total by the number of months to give you an average figure.
List your expenses
Like your income, list down all of the possible expenditures you will be facing. Do not forget to include vehicle-related payments, such as gas, insurance, maintenance, cell phone costs, food and drink, grooming, clothes, toiletries and any other living expenses.
Some of these costs will fluctuate over time. Setting a different budget for each month can help to reduce stress.
Avoid going into debt
As a teenager, you are reaching a point in your life where you are going to meet new people, have some interesting social interactions and experiences and a bit more freedom to buy the things that you have always wanted. However, while blowing your own money on things you have always dreamed about, such as those Nikes that your parents always refused to buy, is a great feeling, it can have a grim impact on your financial future if it is not well handled.
Credit cards can be both a blessing and a curse at the same time. A credit card is a ready-made way to help you pay for things when you are a little low on cash, but it also looks glamorous. However, it is important to remember that credit cards do not provide you with free money; you do have to pay them back, and if you do not earn a regular, decent wage, it can be difficult to pay off.
If you do not need to use a card while you are out, leave it at home. Credit cards should only be used for emergency purposes or large transactions, not just for the designer sneakers or handbag that you saw while you were out with your friends.
Getting a credit card feels exciting, but if you lose control, you will find yourself feeling like a little kid again, asking your parents to bail you out.
Look at your spending
When you first start earning some money, it can be tempting to go out and blow it all.
While it is fun, and everyone should enjoy their hard-earned cash, look at what you are spending it on and where you can save a little money. Think long-term; do you want to buy a new car at some point in the future, or even start to think about saving for a down payment on a house or an apartment? If so, it is important to reign in your spending a little.
First of all, look at all of your regular payments and subscriptions. A bit of clever shopping around and research will help you to find cheap teen car insurance. If you pay for Netflix, do you really need to pay for Amazon Prime as well, or vice versa? Do you pay a monthly gym fee? If so, can you quit that and go for runs in the park or do home workout sessions instead?
Once you have reduced your regular payments, cast a close eye over all the other transactions you make. Are you buying a coffee on the way to work or school? If you do, ditch it and take a reusable cup with your own java in. Do you waste money on food from the canteen for lunch? Maybe you could start taking a pack up with you instead. All of these little things soon add up and can save you a fortune!
If you really want it, save for it
As a teenager, you are very nearly an adult, and with this becomes responsibility and self-reliance. Establishing long-term savings goals allows you to manage your expectations for the main life targets you have always wanted to achieve. Whether it is buying your first car, your own house, or starting up your own company, you need a plan to be able to set your dreams in motion.
Keep on hustlin’
No matter how old you are, there is no such thing as ‘ too much work. ‘ If you have the necessary physical and mental abilities, take as many side hustles (legal, of course!) as you can to make saving a lot easier. It helps to pick up some odd jobs along the way. Be it trimming your neighbor’s lawn, babysitting, tutoring children, or even clearing snow off someone’s driveway, doing some small jobs will keep income coming in. If your neighbor or friends are too time-poor to do such minor tasks, they are going to be looking for help, so you can make some easy cash to put aside.
Growing up is all about making difficult choices, and the sooner you make them, the better the future looks. Money sadly does not grow on trees, but a healthy financial future emerges from good decision-making.
