Although you may think that teenage is a tender age for money matters, but the truth is that it is the right age when one should start managing money. Personal financial management is a time dependent game. The sooner you start saving the better investments you will gain.
Let’s take an example.
Suppose you want to save $10,000 on your 30th birthday. Starting at the age of 13, you need to save only $0.78 per day. You need to save $4.47 starting from the age of 25 whereas when you start at the age of 29, you need to save $27 per day.
The above example clearly illustrates the importance and advantage of money management if you start early in your teenage.
However, an overwhelming majority of teenagers are not aware of money management tips. According to a study conducted by ING Direct as much as 87% of teenagers in America do not know much about personal financial management. But this does not mean that they do not want to learn about managing money. The study showed that about 35% of teenagers want to know how they can save and manage money.
So, being responsible parents you should take up the challenge of teaching your children or teens about managing money. Teaching money management skills to your children should be in your priority list.
Here under, I have come up with various Money Managing Tips for Teenagers that will help them to learn how to manage money.
A vital money managing tip for teenagers is that they have to start as early as possible on managing their money. By starting early, you can save more money. Plus: you do not face hardships in saving money. Just consider this, in the teenage, you have fewer expenses to manage, whereas if you are starting at an age of 30 years, you have more responsibilities and thus more sources of expenses. Take another example, suppose you want to save $20,000 on your 30th birthday. At an age of 13 years, you require to save just $1.56 per day, whereas if your age is 29 years, you require saving $55 per day. So it is much easy to save money if you start early.
Saving more is the golden rule of managing money. As a teenager, you should develop the habit of saving money. Moreover, you should inculcate the habit of saving more. Suppose you get a monthly allowance of $20, then you should save at least $10 and should keep the rest for your monthly expenses. It would be best for you if you can save your full monthly allowance.
Have a Savings Account
Most of the teenagers tend to keep their accumulated money with themselves in their home lockers. However, this is not always a good idea as you are tempted to spend that money. A better option is to open up a savings account in a bank. This way your money will be safe, and you will not be able to spend it easily.
Take up a Part-Time Job
You should seek some other ways to earn some extra money for yourself, it would be a great idea to take up some part-time job. It could be a babysitting job or you may work in a restaurant. You can even work out an arrangement with your parents regarding your academic results. For example, it could be like you get $5 for every grade “A” that you secure.
Monitor your Earnings and Expenditure
Budgeting is an essential part of managing personal finances. So you should monitor your earnings and expenditure. With budgeting, you will learn to plan your expenditures. You will understand that it is essential to maintain a balance between your expenditures and savings. Budgeting helps you to save for things which you want to purchase.
Being frugal enables you to cut down on your unnecessary and extravagant spending. Frugal is not being a miser instead it teaches you the importance of every single dollar. So reduce your expenseswherever possible. Look for cheap alternatives instead of buying expensive ones. Find a shop, from where you can get the same product at a lesser price. Spending less money on dining out is another way you can be frugal.
Use Debit Card instead of Credit Card
You might be tempted to use credit cards but remember it is one of the biggest sources of debt. So, instead of credit card, use your debit card. Credit Cards tempt you to overspend and do spontaneous buying. Using Debit Cards you can avoid over spending.
Time is money. Knowing this and practicing it right from your teenage has great rewards. Suppose, for example, you earn $2 per hour in a babysitting job. Now you want a music CD and drive full one hour to buy it for $10. Instead, that music CD could also have been bought from a local store for $8. So, in all you had wasted $6; $2 for buying that CD at a costly price and $4 for wasting couple of hours in driving which you could have utilized in earning $4 in your babysitting job.
Know Your Priorities
You need to know your priorities. This is important because you have limited finances with you and need to spend every penny intelligently. So you should allocate your money according to your priorities. For example, you need to buy study material and a cell-phone, but do not have enough money to buy both of them at the same time. In such a situation, you need to prioritize. So you should buy study material first and then accumulate money to go on to buy cell-phone.
Take Advice from your Parents
Your parents can be your best financial advisor. So you should take their help in your personal financial matters. You should also learn from your parent’s experience in managing their financial life. This can prove to be a great learning as far as money matters are concerned.
So you see that it is never too early to start managing your finances. Money matters hold an important place in your life, and it is always a good idea to start managing money right from your teenage. The Money Managing Tips for Teenagers that I have illustrated above can prove to be a valuable guide for you.