Financial discipline is one of the most important skills a person could learn early in their life. How you manage the little money you have as a teenager may determine how you’ll do the same once your bank account is full. As such, it’s always recommended that you learn how to save for a rainy day.
There is no perfect rule when it comes to saving money. However, most people tend to follow the 50-30-20 rule, which basically states that you should spend half of your after-tax income on your needs and 30% on what you consider as ‘wants.’ Afterward, the remaining 20% should be allocated to debts and saving.
Of course, this might be quite challenging to adapt as a teenager. For that reason, we’ve compiled a few tips that might help you in the process. Read on to learn more!
- Adjust your spending
Most teenagers find it difficult to save money not because it’s impossible but because of their spending habits. It’s common for someone at that age to find themselves buying things without any particular plan. For instance, you might be pressured to spend a lot of money so that you can fit into a certain clique.
However, if you are determined to save some money, you’ll need to overcome all this pressure and adjust your spending accordingly. For one, don’t purchase what you don’t need, instead, use that money for other urgent issues. If it’s something that you really want but can’t afford, you can check out websites like Yo! Free Samples for freebies from top brands. (1)
If you’re not sure about your spending, track where your money goes for the next month. At the end of that period, note down those transactions that made up the biggest percentage of your spending.
But that’s not to say smaller transactions don’t matter. In fact, they are the ones that are rarely monitored yet make up the biggest part of one’s spending. Therefore, keeping track of every transaction can help you save a lot of money in the coming months.
- Open a savings account
You need to open a savings account with your bank if you haven’t already done that. It might seem like an obvious step but making that decision has a significant impact on your money-saving journey. The mere thought of having this account active motivates you to deposit some cash. Before you know it, you’ll be doing it on a regular basis, which will end up becoming one of your habits—a good one, for that matter.
Of course, you might be tempted to go the traditional way and save your money at home. However, this comes with a lot of disadvantages.
First, the safety of your money isn’t guaranteed, which is something you don’t want running in your mind every time you want to deposit some more cash. Also, the fact that you have easy access to this money brings a lot of temptations, and you’re likely to bow down to pressure as soon as your income runs low.
However, as a teenager, you’ll probably need to be accompanied by your parent or guardian for the account to be registered. Also, some banks have age limits when doing so; therefore, be sure to read the rules of your preferred bank before commencing the process. It’s worth noting that putting your money in a savings account earns you annual interest.
- Set your goals
Having a savings goal is another simple factor that can have a huge impact on your success. Goals are meant to motivate you to work a little harder, which gives you a better chance of succeeding. These goals give you an idea of how much you need to save every month for you to reach whatever amount you are targeting.
Many people set these goals, but they don’t follow up on them. In the long run, they end up not hitting their targets, which can be quite frustrating. Therefore, for you to realize any success in the world of saving, you’ll need to be ready to sacrifice some of your wants. Similarly, never sacrifice your basic needs to save money. Instead, try and avoid buying those products or services that aren’t a priority. (2)
Saving money as a teenager can be quite challenging, especially if you have limited cash flow. However, if you cut your spending, especially for expensive items, and set specific goals, you’ll be surprised by how much you can save within a few months. To boost your motivation, you might also want to open a savings account.
- “15 Ways to Save Money That Deliver Big Returns in the Long Run”, Source: https://www.investopedia.com/how-to-save-money-daily-monthly-and-long-term-4684028
- “Tips To Saving Money In Your Daily Life”, Source: https://www.thebalance.com/save-money-every-day-453945