As a teenager, how you manage and spend your money now will impact how you handle it in the future. It can be overwhelming to think about all the responsibilities you are about to take on in the next few years, but knowing you will have control over your life brings some excitement and eagerness to get started.
Creating a budgeting system when you are young will help you have more control over your financial wellness as you continue to grow up. With April being Financial Literacy Month, this is the perfect time to figure out what budgeting tricks work for you and how they will help you succeed. Here are some tricks to help you take your budgeting to the next level.
Know that a budget is not a test
No one is grading you on how well you maintain your budget; it is merely there to help you navigate your financial independence. Your budget is something that will change as your life and needs change. There will be times you will set a budget and you might overspend in certain areas — that is okay. Getting yourself back on track and molding your budget to what you need it to be is all a part of the process and learning with your experiences.
Have a bank account
Having a bank account is simply one of the cornerstones to making sure you budget well. With the technology we have today, banking comes with the ability to check on your money and your account from virtually anywhere. Knowing where your money is, how much money you have, and how you can access it when you need to is vital to your financial success.
Bank accounts come in many different forms. The two most common that you will encounter are savings and checking accounts. Your savings account is the place you put your money to accumulate, whether it is for a big purchase or just to have saved for emergencies or financial goals. Your checking account, on the other hand, will be the place where most of your spending occurs as your debit card and checks are associated with this account.
Having a bank account comes with great responsibility. Besides being told that you should save more than you spend, you should also be conscious of where and how you spend. It is important to be wary of unfamiliar websites that you want to buy from, as scam sites that aren’t very reputable have become more and more common. These spammy sites will take your banking information you provide at checkout and then try to take any and all money they can get from you.
Becoming familiar with how your online banking looks and reviewing your spending history daily, if not weekly, can keep you up to date with the balance in your account and have you alerted at the first sign of trouble if you see an unauthorized charge. You should also pay attention to any services that give you a free trial period. Many times, if you do not cancel the trial before a certain day, you will be enrolled in their subscription for their normal fee. Being responsible with knowing exactly how much should be coming out of your account and knowing what to do if there is a problem is important to your financial wellbeing both now and in the future.
Make budgeting fun
When you ask for budgeting tips, people often suggest making a budgeting spreadsheet. That may work for some, but if you are not actively looking at that spreadsheet daily, weekly, or monthly, it hardly serves a purpose. Finding budgeting apps to have on your phone can help you visualize your budget and have it accessible to you anytime, anywhere, and in the place you use most often. Most budgeting apps can link up to your bank account so they can monitor your spending and categorize your purchases, this way you can see exactly where you are spending the majority of your money.
Set financial goals
When you create your budget, making goals for yourself can help you feel like there is a finish line you are trying to reach. These goals can be both short- and long-term. If you have a long-term goal you are striving for, try making smaller goals as milestones to help you feel like you are on track and keep you from feeling overwhelmed by the process. For example, your short-term goal of adding more and more money to your savings each time you get paid can help you reach your larger goals of saving enough money to move out on your own or lease a car.
Ask for advice
Leaning on others to get an idea of what worked for them and what didn’t can help you determine where you want to start with your budgeting. Asking your parents about how they manage their finances now versus when they were your age can provide insight into the lessons they learned along the way. They might have spent their teens and early twenties spending more than they should have, perhaps giving you the advice of saving more now to spend on important things later.
Letting them in on the goals you have for yourself, like moving out on your own, and asking them how to do that without going broke can be vital support as you set up a long-term plan. They will probably tell you about the importance of being prepared financially for any loans you want to take out in the future, including how you should know the difference between leasing and owning a car, what type of credit cards you should steer away from, or even if you should save up to rent or buy a home. Asking about the basics on loans approvals and how a preapproval for a mortgage works or tips to pay off student loans can keep you on budget and set you up for financial success later in life. Opening up and sharing your financial goals can bring you some seasoned advice from those that have gone through it already.
Honing your budgeting skills now as a young adult will help you reach any financial goals you set for yourself in the future. Taking control of your financial literacy and asserting your independence will prepare you for whatever life throws at you!